NTRODUCTORY  BOOKKEEPING 


■■■■KWiaa-iika'-miJHK-' ' 

B^^^s^E^^^■■.'■.'■ '.''.^ 

l|JH|^^^.3|.»^lj|ft>JjHE:;-''^ 

;::;:;:.:::::■:;■:■;■;  :-V>;::/;^^             ■::;.:;;•;;;  ■;;,;-/,-.;,x  •.•:-';:  ^v;--:  ,:■   . 

■■'■:■:-^^■■^'■  ^^^■■^■^^^v■.•'  ''':/-::'■::::; :'rl:y-: ■■'':■'':■:-: -'^ 

-^r^ 


^^       n 


■J       »>,■»>> 

>     ,  J'   I  >    , 


'   ■>  >  1     5    »    i     0      1  '  1  '      )      ',     J       *  J      ,    ,      '     , 

Introductory  Bookkeeping 


Arranged  for  use  in  the  classes  of 


HIGH   SCHOOL  COMMERCIAL   DEPARTMENTS 

PRIVATE   COMMERCIAL   SCHOOLS 

and  INTERMEDIATE  SCHOOLS 


By  F.  C   WEBER 


Head    of    the  Department  of  Commerce 
Los  Angeles  Polytechnic  High  School 
Author  of  Corporation  Bookkeeping 


ALL    RIGHTS    RESERVED 


FOURTH  EDITION 

Published    by  the  Author 

Los  Angeles,  California,   1913 


Copyrighted  1906,  by 
Fred  C.  Weber. 


Copyrighted  3907,  by 
Fred  C.  Weber. 


Copyrighted  1909,  by 
Fred  C.  Weber. 


Copyrighted  1911,  by 
Fred  C.  Weber. 

EDUCATION  DErr. 


^^  -.^v 


Ak 


PREFACE. 

This  text  is  designed  for  beginners.  The  aim  throughout 
is  to  make  the  pupil  understand  and  reason  rather  than  to 
blindly  follow  illustrations  or  formal  rules.  Discussions  occur 
at  the  time  that  points  come  up,  the  time  when  the  pupil  is 
interested  in  the  points  and  most  likely  to  think  about  and 
understand  the  discussion.  Disconnected  discussions  of  busi- 
ness nomenclature  and  processes,  under  black-faced  captions, 
are  purposely  avoided.  The  attempt  is  made  to  treat  the  sub- 
ject as  a  whole,  unfolding  it  step  by  step,  supplying  sufficient 
drill  upon  each  step  to  fix  it  in  the  pupil's  mind  before  taking 
up  another  step.  The  aim  is  the  understanding  of  the  trans- 
action, the  ability  to  see  through  the  bookkeeping  machinery  to 
the  account  and  to  know  and  understand  the  meaning  of  the 
account.  If  the  work  is  followed  as  given,  the  teacher  asking 
opportune  questions  from  time  to  time,  the  pupil  will  develop 
this  ability.  This  plan  of  work  results  in  intelligent,  willing 
and  accurate  workers.  The  text  has  been  demonstrated  by 
many  years  of  use  in  the  class  room  and  with  hundreds  of 
pupils. 

In  conclusion,  acknowledgment  is  gratefully  made  to  those 
teachers  who  have  helped  with  suggestions  and  who  have  tried 
so  earnestly  in  the  class  room  to  carry  out  the  plan  and  ideas 

of  the  text. 

THE  AUTHOR. 


54^^55 


To  Teachers: 

These  few  suggestions  are  given  with  the  hope  that  they  will  aid 
you  in  your  work. 

The  subject  as  presented  in  the  following  pages  has  been  simplified. 
Non-essentials  have  been  omitted.  This  makes  it  possible  to  do  every- 
thing given  with  great  thoroughness.  Thorough  understanding  on  the 
part  of  the  pupil  and  the  doing  of  his  work  as  a  result  of  his  thought 
is  the  goal. 

In  chapter  one,  when  the  pupils  are  young,  it  is  a  good  plan  to  work 
out  the  various  points  step  by  step,  using  school  currency  and  a  hat  to 
illustrate  the  transaction.  It  is  often  helpful  to  use  boxes,  desk  drawers, 
or  similar  receptacles  to  visualize  the  account,  placing  on  the  side  of  them 
a  sheet  of  paper  with  the  account  name  on  it.  Then  using  school  currency 
and  familiar  objects,  go  through  a  few  transactions,  keeping  track  of  the 
values  involved  as  indicated  in  the  last  sentence  on  page  1.  Analyze 
the  accounts  thus  built  up  as  on  page  2.  Emphasize  the  cost  feature 
(page  2),  show  that  in  order  to  get  something  into  one  receptacle 
(account)  something  must  be  supplied  from  another  receptacle  (account). 
The  getting  of  a  value  costs  the  giving  of  another.  The  giving  of  a 
value  supplies  another  (page  3).  Emphasize  the  fact  that  an  account 
is  a  place  for  keeping  track  of  a  class  or  kind  of  value  and  that  it  will 
answer  that  purj^ose  when  kept  in  a  book  the  same  as  when  nailed  on  a 
box,  bin,  etc.  Such  or  similar  illustrations  will  often  help  the  pupil  to 
see  that  each  account  is  a  record  of  a  certain  kind  of  value  and  that  it 
has  definite  meaning. 

The  majority  of  pupils  that  fail  in  bookkeeping  fail  because  they  do 
not  read  with  understanding  or  they  are  very  inaccurate  in  their  figuring. 
It  is  worth  while  to  know  your  text  well  enough  to  be  able  to  refer  a 
pupil  to  the  exact  place  where  he  will  find  the  point  that  he  has  failed  to 
master.  (The  index  will  help  greatly  in  this.)  It  is  as  necessary  in 
bookkeeping  to  teach  pupils  to  read  and  understand  as  to  select  debits 
and  credits.  Sometimes  it  is  wise  to  read  a  troublesome  sentence  or 
paragraph  for  them  or  with  them.  Many  details  of  routine  brought  out 
will  be  omitted  by  the  pupil  unless  you  refer  him  back  to  the  instruction 
until  the  detail  becomes  a  habit. 

Questions  a,  b,  c  (see  end  of  chapters)  should  be  emphasized,  and 
applied  to  accounts  over  and  over,  and  their  idea  kept  constantly  before 
the  pupil. 

The  power  to  read,  think,  act  intelligently,  and  habits  of  systematic 
work,  neatness  and  precision  are  training  that  should  be  achieved  through 
the  study  of  bookkeeping. 

Eespectfully, 

F.  C.  WEBER. 


il 


. ''  V\ ;  ''jj!  ' 


I.— ACCOUNTS. 
I. 

Suppose  you  go  to  a  store  and  buy  a  hat,  paying  $5.00  in 
cash  for  it.  You  receive  a  hat  and  you  give  money.  Any- 
thing which  can  be  used  to  buy  with,  or  that  costs  something 
to  obtain,  has  value.  Value  is  purchasing  power.  The  hat  is 
of  value  to  you — it  costs  you  $5.00 ;  it  was  of  value  to  the  store- 
keeper for  it  secured  for  him  your  $5.00.  The  $5.00  was  of 
value  to  you,  it  secured  for  you  something  that  you  need;  it  is 
of  value  to  the  storekeeper,  he  can  use  it  to  secure  something 
which  he  needs.  So  we  find  in  this  transaction  an  exchange  of 
values. 

Money  is  the  standard  by  which  we  measure  value.  "We 
measure  the  worth  of  the  hat  by  saying  it  has  a  value  of  $5.00. 

There  is  a  value  received  or  promised  for  receipt  and  a 
value  given  or  promised  to  be  given  in  every  business  trans- 
action. A  BUSINESS  TRANSACTION  is  an  actual  or  prom- 
ised exchange  of  goods,  property  or  other  representatives  of 
value. 

BOOKKEEPING  is  the  keeping  of  a  systematic  record  or 
history  of  the  transactions  of  a  business.  We  must  bear  in 
mind  that  this  record  or  history  is  of  and  for  the  business  and 
not  of  the  men  conducting  the  business.  In  double  entry  book- 
keeping, we  keep  track  of  both  the  values  received  or  promised 
for  receipt  and  the  values  given  or  promised  to  be  given.  In 
doing  this,  we  group  values  of  a  certain  kind  together  under 
one  head:  for  instance,  those  things  that  we  buy  for  the  pur- 
pose of  selling  again — things  that  we  "deal  in" — we  classify 
as  merchandise ;  value  that  passes  from  hand  to  hand  as  money 
and  in  the  place  of  money,  we  classify  as  cash,  etc.  A  conven- 
ient way  of  keeping  track  of  the  different  values  is  to  write 


down  the  name  of  a  particular  kind  of  value  and  in  one  col- 
umn, on  the  left  hand  side,  underneath  the  name,  set  down 
what  all  values  of  that  class  cost,  or  their  worth,  as  they  are 
received;  in  another  column,  on  the  right  hand  side,  under- 
neath the  name,  set  down  the  worth  of  all  values  of  that  class 
as  they  are  given  out  or  disposed  of. 
Example : 


yd?'  /  C 


Here  the  left-hand  column  shows  that  we  have  received 
two  different  lots  of  merchandise,  the  first  valued  at  $426.30, 
the  second  at  $216.23;  or  this  column  shows  us  that  merchan- 
dise has  cost  us  altogether  $642.53.  The  right-hand  column 
shows  us  that  we  have  given  out  or  disposed  of  three  different 
lots  of  merchandise  valued  at  $74.10,  $5.16  and  $32.20  respec- 
tively, or  that  of  the  merchandise  that  we  have  received,  we 
have  disposed  of  a  part  for  $111.46.  Remember  that  merchau- 
dise  is  usually  not  sold  at  the  same  price  for  which  it  is  bought. 

The  business  must  have  given  some  form  of  value  for  this 
merchandise  which  has  been  received.  Let  us  suppose  we  paid 
cash.  We  parted  with  the  cash  in  order  to  get  the  merchan- 
dise, that  is,  the  merchandise  cost  us  cash,  and  cash  produced 
for  us  merchandise,  thus  merchandise  in  this  case  costs  value, 
cash  produces  or  gives  value.  Likewise,  if  we  sell  merchandise 
for  cash,  we  part  with  merchandise  in  order  to  obtain  cash, 
hence,  cash  costs  us  value  in  the  form  of  merchandise.  Mer- 
chandise produces  or  gives  value  in  the  form  of  cash.  Some- 
times instead  of  value  being  given  at  once,  it  is  promised  for  a 
future  delivery,  the  business  thus  assuming  an  obligation,  and 
later,  when  the  value  is  actually  delivered,  the  business  re- 
deems its  obligation. 

The  above  arrangement  of  merchandise  bought  and  sold, 
or  similar  arrangements  for  keeping  track  of  values  of  a  par- 
ticular class  or  kind,  is  called  an  account. 


An  account  costs  value  when  it  is  the  cause  of  the  business 
parting  with  some  other  form  of  value  or  of  the  business  as- 
suming some  obligation.  An  account  produces  value  when  it 
supplies  the  business  with  some  other  form  of  value  or  re- 
deems an  obligation  for  the  business. 

It  is  often  very  necessary  to  know  WHEN  values  are  re- 
ceived or  given,  so  we  will  modify  the  above  record  by  giving 
the  date  in  each  case.  To  help  us  in  keeping  these  facts  in  a 
neat  and  orderly  manner  we  will  rule  lines  and  make  the  ar- 
rangement as  follows : 


^^i.^ty 


r.: 


=-^^z.,<^^-.«^-^ 


^f-' 


^ 


7 


<i^»«^-#fc<3-«^<r 


'9- 


K? 


a3 


Above  is  a  Merchandise  account  and  a  Cash  account.  The 
items  set  down  on  the  left-hand  side  are  called  DEBITS ;  those 
on  the  right-hand  side  are  CREDITS.  DEBIT  means  to 
charge  or  to  enter  on  the  left-hand  side  of  the  account. 
CREDIT  means  to  place  on  the  right-hand  side  of  the  account. 
REMEMBER  that  we:  Debit  an  account  when  it  costs  or  re- 
ceives value,  and  Credit  an  account  when  it  produces  or  gives 
value. 

You  will  notice  in  the  above  Merchandise  and  Cash  ac- 
counts that  when  merchandise  costs  value,  or  is  received,  and 
debited,  cash  is  given,  or  supplies  the  value,  and  is  credited. 
Also  when  cash  costs  value,  or  is  received,  merchandise  pro- 


duces  value,  or  is  given.  In  every  business  transaction  there 
is  an  exchange  of  values.  The  getting  of  one  form  of  value  is 
the  cause  of  our  parting  with  another  form  of  value,  hence  we 
say  the  account  under  which  it  is  classified  COSTS  value.  The 
giving  of  one  form  of  value  is  the  cause  of  receiving  another 
form  of  value,  hence  we  say  the  account  under  which  it  is 
classified  PRODUCES  value.  The  book  in  which  accounts  are 
kept  is  called  the  "Ledger." 

You  should  now  be  able  to  answer  the  following  question : 

What  is  meant  by  value? 

What  purpose  does  money  serve? 

What  is  a  business  transaction? 

What  is  bookkeeping? 

What  is  the  object  of  double  entry  bookkeeping? 

What  is  an  account? 

When  does  an  account  cost  value? 

When  does  an  account  produce  value? 

What  is  meant  by  debit? 

What  is  meant  by  credit? 


II. 

You  will  now  take  two  sheets  of  letter-head  paper,  or  two 
half  sheets  of  foolscap,  and  rule  on  each  in  RED  ink  the 
proper  lines  for  one  account  as  shown  in  the  above  Merchandise 
account. 

Using  your  pencil  and  ruler,  mark  with  a  small  dot  the 
location  of  each  vertical  line  near  the  top  of  the  sheet  and 
again  near  the  bottom.  Be  accurate  in  doing  this  so  that 
columns  will  be  of  same  width  at  top  and  bottom.  Place  your 
ruler  upon  the  paper  so  that  the  beveled  edge  will  be  up  from 
the  paper  and  over  the  dots  previously  made.  Now  draw  your 
pen  with  red  ink  along  the  edge  of  the  ruler  that  is  up  from 
the  paper,  with  a  firm,  free  movement.  In  ruling  double  lines, 
do  not  move  the  ruler  but  slant  the  penholder  enough  to  give 
the  space  between  the  lines. 


Over  one  of  these  accounts,  equally  distant  from  the  right 
and  left  margins,  write  the  heading  "Merchandise";  over  the 
other  "Cash."  You  will  now  use  these  accounts  in  keeping 
track  of  the  values  received  or  given  in  the  following  transac- 
tions, which  are  taken  from  a  hay  and  grain  business: 

Jan.  1.  You  have  on  hand  $500  in  cash.  Place  this  amount 
on  the  debit  side  of  your  Cash  account,  on  the  first  line,  writing 
in  the  wide  column  the  words  "Balance  on  hand."  Thus  your 
account  will  show  the  amount  of  money  on  hand  at  the  time  of 
beginning  these  transactions.    Be  careful  not  to  omit  the  date. 

Note:  For  the  sake  of  simplicity,  work  of  Chapters  II  and  III  is  not 
intended  to  balance;  hence  there  is  no  corresponding  credit  for  the  debit  item 
which  shows  the  balance  of  cash  on  hand. 

Bought  for  cash  an  invoice  of  hay  amounting  to  $150. 

In  every  transaction,  ask  yourself  the  questions :  (1)  What 
account  costs  or  receives  value?  (2)  What  account  produces 
or  gives  value?  REMEMBER  that  we:  Debit  the  accoimt 
that  costs  or  receives  value,  and  Credit  the  account  that  pro- 
duces or  gives  value.  There  must  be  at  least  one  debit  and  one 
credit  item  for  each  transaction. 

Bought  for  cash  an  invoice  of  barley  amounting  to  $210. 

Sold  for  cash  an  invoice  of  hay  and  barley  amounting  to 
$36.50. 

Bought  for  cash  100  bu.  oats  at  86cts.  per  bu. 

Sold  J.  D.  Snell,  for  cash,  2  tons  hay  at  $8.50  per  ton. 

Sold  for  cash  2  bu.  barley  at  65  cts. 

2.     Bought  of  Jas.  Wilton,  for  cash,  2  tons  rolled  barley 

at  75  cts.  per  cwt. 

Sold  Smith  &  Swayne,  200  lbs.  rolled  barley  at  80  cts.  per 
cwt.,  10  tons  hay  at  $8.60  per  ton ;  received  cash  for  same. 

Note:     This  is  one  sale  although  two  items  were  sold.     Of  course,  being 
one  transaction  only  one  entr>-  is  made  for  the  total. 

4.  Sold  the  Star  Livery  Co..  for  cash,  25  tons  hay  at  $8.50 
per  ton ;  50  bu.  oats  at  41  cts.  per  bu. 

5.  Bought  of  C.  C.  Moore,  225  bu.  oats  at  35  cts.  per  bu., 
paid  for  same  in  cash. 

Sold  for  cash  50  lbs.  rolled  barley  at  IV2  cts.  per  lb. 

6.  Bought  for  cash  3  tons  of  hay  at  $5  per  ton. 

Sold  J.  D.  Snell.  for  cash,  10  bu.  oats  at  42  cts.  per  bu. 

Follow  these  instructions  step  by  step. 

1.     Sharpen  your  pencil  to  a  very  sharp  point. 


2.  Go  through  your  ledger  and  foot  the  accounts  IN 
PENCIL,  placing  the  totals  in  position  like  the  small  figures 
in  the  following  account,  but  do  not  rule  any  line  above  or 
below  the  footings. 


/^ 


/ 


^'o 


>=?^ 


^0 


^%^. 


/O 


/ 


7 


^-e> 


/ 


.Z.:2<r' 


Note;  If  errors  occur  In  work  that  has  been  written  In  ink,  do  not 
erase,  but  turn  to  "Corrections"  in  the  Appendix  and  proceed  according  to 
Instructions  found  there. 

You  should  now  be  able  to  answer  the  following  questions : 
How  much  has  merchandise  cost  you? 
How  much  merchandise  have  you  sold? 
How  much  cash  was  on  hand  at  the  beginning? 
How  much  cash  has  been  received? 
How  much  cash  has  been  paid  out? 
How  much  cash  have  you  now  on  hand? 
Present  your  work,  with  your  answers  to  the  above  ques- 
tions, to  your  teacher  for  inspection. 


III.— EXPENSE. 

Things  that  are  bought  with  the  expectation  that  they  will 
be  consumed  ("used  up")  in  carrying  on  the  business,  are 
classified  as  expense  and  charged  to  the  Expense  account. 
Also  all  outlays  for  labor,  rent,  etc.,  are  charged  to  this  account. 
In  short  the  Expense  account  shows  the  cost  of  carrying  on  the 
business. 

You  may  now  take  a  half  sheet  of  ledger  paper  and  open 
accounts  as  follows:  At  the  top  of  the  first  page  (on  the  first 
blue  line,  equidistant  from  the  right  and  left  margins)  write 
"Cash,"  at  the  top  of  the  second  page  write  "Merchandise," 


and  at  the  middle  of  the  second  page  write  "Expense."  Using 
these  accounts,  you  will  now  keep  track  of  the  values  in  the 
following  transactions,  which  are  taken  from  a  fuel  business : 

Jan.  10.  Cash  on  hand  $432.65.  Place  this  amount  with 
the  date  on  the  debit  side  of  your  Cash  account,  writing  in  the 
wide  column  the  words  "Balance  on  hand."  Thus  your  ac- 
count will  show  the  amount  of  money  on  hand  at  the  time  of 
beginning  these  transactions. 

Rented  a  lot  at  the  corner  of  Twelfth  and  Ohio  streets  to 
be  used  as  a  fuel  yard,  paying  one  month's  rent,  $22.50,  in  cash. 

Remember  in  every  transaction  to  ask  yourself  the  ques- 
tions: What  account  costs  or  receives  value?  What  account 
produces  or  gives  value? 

11.  Paid  James  Sloan  for  work  in  cleaning  up  fuel  yard 
$2  in  cash. 

Bought  3  lbs.  nails  for  use  in  repairing  yard  fence,  10  cts. 
Bought  lumber  for  use  in  repairing  fence  and  paid  for 
same  $2.50  in  cash. 

12.  Bought  one  carload  of  oak  wood  for  cash,  $63. 
Bought  for  cash  20  tons  of  Black  Diamond  coal,  $120. 
Paid  J.  Swinton  for  cleaning  and  repairing  office  room, 

$4.25. 

Bought  office  books  and  stationery  for  cash,  $12.80. 
Bought  postage  stamps,  $5. 

13.  Sold  C.  W.  O'Connor,  for  cash,  1  cord  wood,  $9.75. 
Received  cash  for  1  ton  coal,  $9.50. 

14.  Bought  for  cash  1  carload  gum  wood,  $50. 

Sold  Smith  &  Dunton,  for  cash,  2  tons  Black  Diamond 
coal,  $19. 

Sold  25  cts.  worth  of  stamps  to  accommodate  a  customer. 

Bough  for  cash  from  the  Southern  Mill  Co.,  5  loads  kindling 
at  $2  per  load. 

15.  Sold  for  cash  1  ton  coal,  $9.50. 

Sold  for  cash  to  Walter  Stone,  1  cord  gum  wood,  $8,  and 
1  sack  kindling,  25  cts. 

Sold  postage  stamps  for  cash,  20  cts. 

Received  cash  for  3  sacks  kindling,  75  cts. 

Paid  John  Dougan's  wages  for  week  in  cash,  $9.50. 


8 

Foot  accounts  as  instructed  in  Chapter  II  and  determine 
the  answers  to  the  following  questions: 

What  is  the  total  cost  of  merchandise? 

What  are  the  total  sales  of  merchandise? 

How  much  cash  was  received  during  the  week? 

How  much  cash  was  paid  out  during  the  week? 

How  much  cash  is  there  now  on  hand? 

How  much  has  been  paid  for  the  expenses  of  the  business? 

If  the  books  and  stationery  still  unused  are  worth  $12.00; 
3  weeks'  unused  rent,  $16.90;  unused  stamps,  $4.00;  what  has 
been  the  cost  of  running  the  business  for  the  week? 

Present  your  work  and  the  answers  to  the  above  questions 
to  your  teacher  for  inspection. 


IV.— PERSONAL  ACCOUNTS— TRIAL  BALANCES. 

Under  our  definition  of  a  business  transaction,  page  1,  we 
find  that  values  are  sometimes  "promised  for  receipt"  or 
"promised  to  be  given."  Example:  John  Day  buys  a  wagon 
of  Walter  Boyle  for  $225,  agreeing  to  pay  for  the  same  in  30 
days.  In  this  transaction,  Mr.  Day  receives  a  wagon  and 
promises  to  give  $225;  while  Mr.  Boyle  gives  a  wagon  and 
receives  a  promise  of  $225  to  be  paid  in  the  future.  Trans- 
actions of  this  kind,  where  promises  not  evidenced  by  writing 
are  given  or  received,  are  spoken  of  as  "sales  on  account"  or 
"purchases  on  account."  In  many  cases  these  promises  are 
implied  by  the  actions  of  the  parties  and  are  not  definitely 
stated  in  words. 

We  open  accounts  with  persons,  firms  and  corporations  in 
order  to  keep  track  of  promises  given  and  received  which  are 
not  evidenced  by  writing.  These  accounts  are  called  personal 
accounts.  Debit  personal  accounts  when  they  cost  the  busi- 
ness value,  and  credit  them  when  they  produce  or  supply  value 
for  the  business. 

Take  a  sheet  of  ledger  paper,  number  the  pages,  allowing 
space  as  indicated,  open  accounts  as  follows:  James  D.  Norton, 
Proprietor,  i/o  page;  Cash,  i^  page;  Merchandise,  %  page; 
Expense,  14  page;  Howard  Hamilton,  I/2  page;  Swinton  &  Me- 


Leod,  1/2  page;  Mrs.  J.  W.  Upton,  1/2  page;  Frank  C.  Sinclair, 

1/0  page. 

Using  the  above  accounts,  keep  a  record  of  the  following 

transactions : 

Feb.  1.  James  D.  Norton  invests  $2000  cash  in  a  retail 
grocery  business.  Remember  you  are  keeping  the  records  for 
the  business.  Mr.  Norton  here  supplies  value  to  the  business 
with  the  implied  understanding  that  some  day  his  business 
will  return  this  amount  and  profits  in  addition  to  him.  Cash 
is  received  by  the  business. 

Remember  the  questions  that  you  are  to  ask  yourself  in 

every  transaction. 

Rented  store  at  2302  Central  Ave.,  paying  one  month's 

rent,  $35.00,  in  advance. 

2.  Bought  an  invoice  of  groceries  of  Craig,  Stone  &  Co., 
for  cash.  $510.25. 

Bought  an  invoice  of  wrapping  paper  of  Howard  Hamil- 
ton, on  account,  $27.50. 

Paid  cash  for  cleaning  store,  $7.25. 

3.  Bought  of  Swinton  &  McLeod,  on  account,  a  bill  of 
groceries  amounting  to  $375. 

Bought  of  Howard  Hamilton,  on  account,  an  invoice  of 
paper  bags,  twine,  etc.,  $39. 

The  proprietor  withdrew  from  the  store  for  private  use, 
groceries  amounting  to  $2.50. 

4.  Sold  Mrs.  J.  AY.  Upton,  on  account,  groceries  amount- 
ing to  $6.13. 

Received  for  petty  cash  sales  during  the  day,  $22.17. 

5.  Bought  of  Thurston  &  Clarke,  for  cash,  an  invoice  of 
groceries  amounting  to  $817.50. 

Bought  of  Swinton  &  McLeod  an  invoice  of  merchandise 
and  had  the  same  charged  to  our  account,  $47.60. 
Paid  Howard  Plamilton  on  account,  $50. 
Received  for  cash  sales  during  the  day,  $26.10. 

6.  Sold  Frank  C.  Sinclair,  on  account,  groceries  amount- 
ing to  $8.94. 

Bought  of  Keystone  Produce  Co.,  for  cash,  an  invoice  of 
fruit  and  vegetables,  $13.70. 


10 


Received  of  Mrs.  J.  W.  Upton,  cash  to  apply  on  account, 
$5.00. 

Received  for  cash  sales  during  the  day,  $49.72. 

Paid  Wm.  Wharton's  wages  for  the  week,  $8. 

You  have  learned  from  the  entries  which  you  have  been 
making  that  whenever  an  account  has  cost  or  received  value 
some  other  account  has  produced  or  given  value  of  an  equal 
amount.  Example:  When  you  have  bought  merchandise 
amounting  to  $50  for  cash,  merchandise  has  cost  you  $50,  cash 
has  produced  $50.  The  debit  of  each  transaction  equals  the 
credit  in  amount.  Since  this  is  true,  the  sum  of  the  debits  of 
your  ledger  must  equal  the  sum  of  the  credits.  You  will  now 
take  a  trial  balance  to  see  if  any  debits  or  credits  have  been 
omitted  from  the  ledger. 

Follow  these  instructions  step  by  step. 

1.  Sharpen  your  pencil  to  a  very  sharp  point. 

2.  Go  through  your  ledger  and  foot  the  accounts  IN 
PENCIL,  placing  the  totals  in  position  like  the  small  figures 
in  the  following  account,  but  do  not  rule  any  line  above  or 
below  the  footings: 


(AH^^-t^>^V^»Z-li-2^?«^ 


Cf— 


fi- 


^ 


^c 


¥'j^ 


P(, 


/o 
/2, 


'7 


.^2p 


/ 


3.     Take  a  half  sheet  of  Journal  paper;  on  the  first  blue 

line  at  the  top,  write  "Trial  Balance,  Feb.  6,  19 "    On  the 

second  blue  line,  write  the  page  and  name  of  the  first  account 
and  in  the  debit,  or  left-hand  money  column,  place  the  total 
debit  and  in  the  credit,  or  right-hand  money  column,  place  the 
total  credit  of  the  account.    The  following  is  correct: 


/ 


LAx-i^yi^C^^^^.    Zc^?-1^^t^'i^.^^/iu^eii4i^ 


:z.<s-o\  ^ 


11 


4.  On  the  next  blue  line,  list  the  next  account  of  your 
ledger,  and  continue  until  you  have  listed  all  accounts  in  the 
ledger,  leaving  out  such  accounts  as  balance  (total  debit  equals 
total  credit). 

5.  Foot  the  trial  balance  in  pencil  in  the  same  manner  as 
you  did  the  accounts  of  the  ledger.  If  the  debit  and  credit 
columns  are  equal,  you  may  rule  and  foot  the  trial  balance  in 
ink.  Rule  one  red  line  across  the  money  columns  above  the 
footings  and  two  lines  immediately  below.  Remember  that 
rulings  should  be  as  nearly  as  possible  upon  the  blue  lines  of 
the  paper  and  never  have  more  than  one  space  between  the 
single  and  double  lines.  Your  trial  balance  should  have  the 
same  form  as  the  following  except  the  color  of  the  ruling : 


/ 

12. 


(^y:2^/z.-C--^<...ciC.Cy 


^d'AZ 


^■ 


2. 


o- 


^3 


^':i 


Note:     Special  instructions  for  locating  errors  in  trial  balances  are  given 
in   the  Appendix. 

You  should  now  be  able  to  answer  the  following  questions  ; 
T\^hat  is  meant  by  "buying  on  account"? 
What  is  meant  by  "selling  on  account"? 
AYhat  are  personal  accounts? 
"When  are  personal  accounts  debited?     Credited? 
What  is  the  object  of  taking  a  trial  balance? 
Apply  the  three  following  questions  to  each  of  the  accounts 
named  in  your  trial  balance : 

(a)  What  does  the  total  debit  show? 

(b)  What  does  the  total  credit  show? 

(c)  What  does  the  difference  between  the  total  debit  and 
credit  show? 


12 

v.— Part  1. 

Using  the  same  ledger,  continue  the  business  of  James  D. 
Norton.  The  following  are  the  transactions  for  the  second 
week  of  February. 

Feb.  8.  Sold  Mrs.  J.  W.  Upton,  on  account,  groceries 
amounting  to  $2.43. 

Mr.  Norton  has  withdrawn  from  the  business  for  his  private 
use  $10  in  cash. 

Cash  sales  for  the  day,  $33.49. 

9.  Paid  Swinton  &  McLeod,  on  account,  $47.60. 

Mr.  Norton  withdrew  from  business  for  private  use  mer- 
chandise amounting  to  $3.10. 

Paid  cash  for  advertising  in  the  Evening  Echo,  $13. 
Received  cash  of  Frank  C.  Sinclair,  on  account,  $5.00. 
Received  for  cash  sales  during  the  day,  $42.25. 

10.  Sold  Frank  C.  Sinclair,  on  account,  merchandist 
amounting  to  $7.86. 

Bought  of  Preston  &  Little  an  invoice  of  fruit  and  vege- 
tables, paid  for  same  in  cash,  $10.18. 
Cash  sales  for  day,  $43.79. 

11.  Sold  Mrs.  J.  W.  Upton,  on  account,  groceries  amount- 
ing to  $3.29. 

Cash  sales  for  the  day,  $39.75. 

12.  Paid  Howard  Hamilton  the  balance  we  owe  him  on 
account. 

Sold  Frank  C.  Sinclair,  on  account,  merchandise  amount- 
ing to  $8.00. 

Cash  sales  for  day,  $42.80. 

13.  Mr.  Norton  withdrew  merchandise  for  his  private  use, 
$2.25. 

Sold  Mrs.  J.  "W.  Upton,  on  account,  merchandise  amount- 
ing to  $4.15. 

Received  of  Mrs.  J.  AV.  Upton,  to  apply  on  account,  $8.00 
cash. 

Received  of  Frank  C.  Sinclair,  on  account,  $5.00. 

Cash  sales  for  the  day,  $59.62. 

Paid  Wm.  Wharton's  wages  for  the  week,  $8. 

You  may  now  take  another  trial  balance  in  the  same  way 


0 


13 

as  the  one  of  February  6th,  include  the  pencil  footings  of  the 
6th  when  adding  up  the  accounts  in  the  ledger.  Omit  from  the 
trial  balance  accounts  which  balance  (total  debit  equals  total 
credit). 

Apply  each  of  the  three  following  questions  to  each  of  the 
accounts  shown  in  your  trial  balance : 

(a)  What  does  the  total  debit  show? 

(b)  What  does  the  total  credit  show? 

(c)  What  does  the  difference  between  the  total  debit  and 
the  total  credit  show? 

Carefully  preserve  your  work  for  this  set.    You  will  need 
it  later. 


v.— PAET  2.— M.  H.  WINTERS. 

Take  two  sheets  of  ledger  paper,  number  the  pages,  and 
allowing  one-half  of  a  page  for  each  account,  open  accounts  as 
follows:  M.  H.  Winters,  Proprietor;  Merchandise,  Cash,  Ex- 
pense, Hiram  James,  L.  H.  Snowden,  Walter  Spencer.  Star 
Provision  Co.,  N.  C.  Sells.  F.  C.  Ames  &  Co.,  H.  A.  Bolton  &  Co., 
W.  A.  Rae,  Worth  Bros.  Co. 

Using  the  above  accounts,  keep  a  record  of  the  following 
transactions : 

Feb.  1.     M.  H.  Winters  invested  cash  in  business,  $4783. 

Bought  of  ITiram  James  for  cash,  63  Eighth  St.,  95  brls. 
mess  pork  at  $9.80. 

2.  Bought  of  L.  H.  Snowden  on  account,  147  Main  St., 
1025  bu.  wheat  at  $1.05 ;  790  bu.  oats  at  33  cents ;  560  bu.  corn 
at  41  cents. 

Note:. ...When  several  items  of  merchandise  are  Involved  in  one  purchase 
or  sale,  the  entry  is  made  for  the  total  of  the  transaction. 

Sold  A.  H.  Mangood,  162  Market  St.,  for  cash,  12  brls.  mess 
pork  as  $10.20;  165  bu.  corn  at  46  cents;  310  bu.  oats  at  351/2 
cents. 

Sold  Walter  Spencer,  704  Kane  Ave.,  on  account,  342  bu. 
wheat  at  $1.10;  60  bbls.  mess  pork  at  $10,121/2- 

3.  Bought  of  Star  Provision  Co.,  for  cash,  863  lbs.  cheese 
at  9%  cts. ;  77  brls.  flour  at  $6.05. 


14 

Received  cash  of  Walter  Spencer  to  apply  on  account,  $250, 

M.  H.  Winters  withdrew  $10  in  cash  for  personal  use. 

Paid  cash  for  books  and  stationery  purchased  on  com- 
mencing business,  $27.85. 

Sold  N.  C.  Sells,  Fourth  and  Wilton,  on  account,  237  bu. 
wheat  at  $1.09 ;  179  bu.  oats  at  'S6y2  cts. ;  143  lbs.  cheese  at 
111/2  cts. 

4.  Paid  cash  to  L.  H.  Snowden  in  part  payment  of  invoice 
of  the  2nd  inst.,  $425. 

Bought  of  F.  C.  Ames  &  Co.,  611  Wall  St.,  on  account, 
2016  lbs.  Rio  coffee  at  I414  cts.;  19700  lbs.  sugar  at  5%  cts. 

Sold  Walter  Spencer,  on  account,  22  brls.  mess  pork  at 
$10.37;  221  bu.  wheat  at  $1,091/0;  464  lbs.  cheese  at  11%  cts.; 
22  brls.  flour  at  $6.12yo. 

Received  cash  of  N.  C.  Sells  in  full  of  account. 

6.  Sold  H.  A.  Bolton  &  Co.,  on  account,  43  brls.  flour  at 
$6.12;  307  lbs.  cheese  at  lli/o  cts. ;  780  lbs.  Rio  coffee  at  14l^  cts. 

Paid  cash  for  rent  of  building  for  month,  $75, 

Take  a  trial  balance,  following  the  same  routine  as  in 
Chapter  IV,  pages  10  and  11. 

8.  Bought  of  Hiram  James,  on  account,  11540  lbs.  S.  C. 
hams  at  14%  cts. 

Received  cash  of  Walter  Spencer  in  full  of  account. 
Bought  of  the  Dean  Oil  Co.,  Inc.,  for  cash,  60  brls.  refined 
petroleum  at  $9.35. 

9.  Mr.  Winters  withdrew  for  private  use,  cash,  $25. 
Sold  for  cash  75  brls.  sugar,  15000  lbs.,  at  $6.10  per  cwt. 

10.  Bought  of  Hiram  James,  on  account,  275  lbs.  butter 
at  281/2  cts.;  350  doz.  eggs  at  22  cts.;  619  lbs.  cheese  at  9}i  cts. 

Gave  F,  C.  Ames  &  Co.  cash  to  apply  on  account,  $450. 
Paid  cash  to  Hiram  James  in  full  for  bill  of  the  8th  inst. 
Sold  W,  A.  Rae,  on  account,  360  bu,  corn  at  44i/^  cts. ;  200 
doz.  eggs  at  25  cts. 

11.  Bought  of  F.  C.  Ames  &  Co.,  for  cash,  210  bu.  wheat 
at  991/^  cts. ;  40  brls.  of  refined  petroleum  at  $9.70. 

Sold  Worth  Bros.  Co.,  on  account,  60  doz.  eggs  at  251/^  cts. ; 
575  lbs.  cheese  at  11 14  cts. ;  250  lbs.  butter  at  281/2  cts ;  3500  lbs, 
sugar  at  6>g  cts. ;  200  lbs.  Rio  coffee  at  I41/2  cts. 


15 

Paid  L.  H.  Snowden  $500  cash  on  account. 

12.  Received  of  H.  A.  Bolton  &  Co,  cash  to  ballance  ac- 
count. 

Sokl  Star  Provision  Co.,  on  account,  1750  lbs.  S.  C.  hams 
at  16%  cts. ;  290  bu.  oats  at  36  cts. 

14.     Gave  Hiram  James  $100  cash  to  apply  on  account. 

Paid  for  Janitor's  services  $13.50;  for  coal  for  office  use 
$5.25. 

Received  cash  from  Worth  Bros.  Co.  in  full  of  account. 

Take  a  trial  balance  in  the  same  way  as  before,  include  the 
pencil  footings  of  the  6th  when  adding  up  the  accounts  in  the 
ledger. 

Apply  each  of  the  three  following  questions  to  each  of  the 
accounts  shown  in  your  trial  balance: 

(a)  What  does  the  total  debit  show? 

(b)  What  does  the  total  credit  show? 

(c)  What  does  the  difference  between  the  total  debit  and 
credit  show? 

Carefully  preserve  your  work  for  this  set.  You  may  need 
it  later. 


VI.— JOURNALIZING. 

Thus  far  your  work  has  been  to  post  (enter)  the  debits 
and  the  credits  of  the  transactions  directly  to  the  ledger  ac- 
counts. In  this  manner  you  obtain  the  results  of  the  transac- 
tions but  you  do  not  have  as  complete  a  record  of  the  transac- 
tions as  is  desirable  in  business.  For  example,  it  is  not  sufficient 
to  know  only  that  you  have  debited  Mrs.  J.  W.  Upton,  on 
Feb.  4,  $6.13.  It  is  necessary  to  know  (especially  in  case  of  a 
dispute)  why  you  debited  her.  Generally  a  memorandum  of 
the  transaction  is  written  in  a  blotter  or  day-book  or  a  copy 
of  the  sales  ticket  is  kept.  According  to  the  following  illus- 
tration and  instructions  you  will  now  write  the  memoranda  of 
the  transactions  for  February  on  journal  paper  and  at  the 
same  time  select  the  debits  and  credits  and  arrange  them  in 
the  journal  so  that  they  will  be  in  convenient  form  for  posting 
or  transferring  to  the  ledger.    Posting  to  the  ledger  in  business 


16 


is  generally  done  at  odd  times  when  other  matters  do  not  re- 
quire our  attention.  The  first  three  transactions  in  February- 
should  appear  in  the  journal  as  follows : 


^.  /i 


C^i^..<i-'^  ^.^aS 


o. 


^;*^»-«--«7^^i!Z««? 


a  a 


•  3^ 


■  ^7iJ 


s^ 


^ 


/ 


a^^' 


Notice  and  remember  the  following  facts  concerning  the 
above  journal  entries : 

1.  The  name  of  the  account  \x>  be  debited  always  appears 
first. 

2.  Each  debit  or  credit  has  an  entire  line  by  itself. 

3.  The  debits  are  placed  to  the  left,  close  to  the  first  nar- 
row column,  and  the  amount  of  the  debit  in  the  left-hand  money 
column  on  the  same  horizontal  line. 

4.  The  credits  are  written  a  uniform  distance  to  the  right 
of  the  debits  and  the  amount  of  the  credit  is  placed  in  the 
right-hand  money  column  on  the  same  horizontal  line  with  the 
name  of  the  credit. 


17 

5.  The  explanation  is  written  under  the  journal  entry, 
beginning  a  uniform  distance  to  the  right  of  the  credit.  Each 
item  of  merchandise  should  be  capitalized  and  occupy  one  line 
of  the  explanation.  No  part  of  the  explanation  is  outside  of 
the  wide  central  column. 

6.  A  blank  line  is  left  between  the  transactions,  at  the 
center  of  which  a  figure  indicating  the  date  of  the  following 
transaction  is  placed. 

7.  The  full  date  of  the  first  transaction  on  each  page 
appears  at  the  top  of  the  page. 

8.  Never  divide  a  journal  entry.  If  there  is  not  room  for 
all  of  it  on  the  page,  leave  the  remainder  of  the  page  blank 
and  begin  on  a  new  page. 

Journalize  all  of  the  transactions  in  February  (beginning 
on  page  9)  and  present  your  work  to  your  teacher  for  inspec- 
tion. 


VII.— COMPARING  JOURNAL  AND  LEDGER. 

It  is  customary  in  business  to  make  the  journal  entries 
first  and  then  transfer  the  debits  and  credits  from  the  journal 
to  the  ledger.  You  have  now  made  the  entries  for  James  D. 
Norton's  business  in  both  the  journal  and  ledger  direct  from 
the  transactions.  In  order  to  grow  familiar  with  the  usual 
routine,  you  will  now  trace  the  debits  from  your  journal  to  the 
ledger  in  the  following  manner: 

1.  What  is  the  name  of  the  first  debit  in  the  journal? 
Turn  to  the  Cash  account  in  the  ledger. 

2.  What  is  the  amount  for  the  debit  of  Cash  in  the  jour- 
nal? See  if  you  have  that  amount  on  the  debit  side  of  the 
ledger  account. 

3.  What  is  the  date  of  the  transaction  in  the  journal? 
See  if  you  have  entered  the  same  date  in  the  debit  side  of  the 
ledger  account. 

4.  Place  a  light  dot  on  the  double  line  just  to  the  left  of 
the  amount  in  your  ledger  if  you  find  the  item  is  correct  accord- 
ing to  the  three  points  just  applied. 

Continue  through  all  of  the  debits  in  the  same  manner. 
Having   finished   the    debits,   proceed    in   similar   manner 
with  the  credits. 

Look  over  your  ledger  to  see  if  there  are  any  items  which 


18 

do  not  show  the  dot.  If  there  are  any,  look  them  up  carefully 
and  see  what  the  trouble  is. 

Present  your  work  for  inspection. 

Carefully  preserve  your  work  for  this  set.  You  will  need 
it  later. 


VIII.— A.  J.  LAWS. 

Journalize  the  following  transactions : 

Feb.  15.  A.  J.  Laws  engaged  in  the  flour  and  feed  busi- 
ness at  142  Karl  Street.     He  invested  $1900  in  cash. 

(What  account  receives  value?  What  account  supplies 
value?) 

Paid  A.  S.  Lane  for  rent  of  store  to  Mar.  1st,  $50. 

Bought  of  Miller  &  Hale,  on  account,  an  invoice  of  flour 
amounting  to  $524. 

16.  Bought  of  A.  Stevens,  on  account,  invoice  of  hay,  $264. 
Paid  A.  C.  Randall  for  cleaning  store  room,  $4.75. 
Bought  of  the  Gross  Stationery  Co.,  for  cash,  office  books, 

stationery,  etc.,  $28.60. 

17.  Sold  A.  C.  Mills,  on  account,  5  bbls.  flour,  $40. 
Bought  of  Patrick  &  Noble,  for  cash,  10,000  lbs.  Ro.  barley, 

$600. 

Cash  sales  for  day,  $18.75. 

18.  Bought  of  A.  Stevens,  on  account,  invoice  of  bran, 
$110. 

A.  J.  Laws  withdrew  from  business  for  private  use  $25 
in  cash. 

Cash  sales,  $43.75. 

19.  Sold  to  Jno.  Harter,  on  account,  merchandise  amount- 
ing to  $64.25. 

Paid  Miller  &  Hale,  on  account,  $124. 

Sold  A.  C.  Mills,  on  account,  10  bbls.  flour,  $80. 

Cash  sales,  $67.50. 

20.  Received  of  Jno.  Harter,  on  account,  $25. 
Paid  employees  for  services  during  week,  $13.50. 
Cash  sales,  $88.60. 


19 

22.  Sold  Sinclair  "Walker  on  account,  merchandise  amount- 
ing to  $210. 

Received  of  Jno.  Harter,  on  account,  $25. 
Cash  sales,  $74. 

23.  Bought  of  A.  Stevens,  on  account,  invoice  of  mer- 
chandise amounting  to  $160. 

Sold  A.  C.  Mills,  on  account,  merchandise,  $56. 
Cash  Sales,  $91.10. 

24.  Mr.  Laws  withdrew  for  private  use,  $5  cash. 
Paid  Miller  &  Hale,  on  account,  $200. 

Cash  Sales,  $76.40. 

25.  Received  of  Jno.  Harter  the  balance  due  on  his  ac- 
count. 

Cash  Sales,  $96.70. 

26.  Bought  of  A.  Stevens,  on  account,  invoice  of  merchan- 
dise, $104.60. 

Paid  for  extra  labor  today,  $3.50. 
Cash  sales.  $82.90. 

27.  Paid  Miller  &  Hale  the  balance  due  them  on  account. 
Received  of  A.  C.  Mills,  on  account,  $50. 

Cash  sales,  $105. 
Paid  employees'  salaries,  $13.50. 

Paid  J.  C.  Swift  for  use  of  his  team  and  wagon  in  deliver- 
ing goods  during  the  past  two  weeks,  $18.75. 

Mr.  Laws  withdrew  cash  for  private  use.  $10. 
Present  your  journalizing  for  inspection. 


IX.— POSTING  ROUTINE. 

Take  IV2  sheets  of  ledger  paper  and  number  the  pages. 
Allow  one  page  for  Cash  and  one  for  Merchandise  accounts 
and  one-half  page  for  each  of  the  other  accounts.  Open  ac- 
counts in  the  following  order:  A.  J.  Laws,  Proprietor;  Ex- 
pense, Cash,  Merchandise,  Miller  &  Hale,  A.  Stevens,  A.  C. 
Mills,  Jno.  Harter,  Sinclair  Walker. 

Post  the  transactions  from  the  journal  to  the  ledger  in  the 
following  manner: 


20 

1.  What  is  the  name  of  the  first  debit  in  the  journal? 
Turn  to  the  Cash  account  in  the  ledger. 

2.  What  is  the  amount  of  the  first  debit  in  the  journal? 
Place  this  amount  on  the  debit  side  of  the  Cash  account  in  the 
ledger. 

3.  What  is  the  date  of  the  first  transaction  in  the  journal? 
Enter  this  date  in  the  proper  columns  on  the  debit  side  of  the 
Cash  account  in  the  ledger. 

4.  What  page  of  the  journal  is  this  transaction  on?  Place 
the  number  of  the  journal  page  in  the  narrow  column  just  to 
the  left  of  the  amount  on  the  debit  side  of  the  Cash  account 
in  the  ledger. 

5.  What  page  of  the  ledger  is  this  account  on?  Place  the 
number  of  the  ledger  page  in  the  narrow  column  just  to  the 
left  of  the  word  Cash  in  the  journal. 

Proceed  with  each  of  the  debits  in  similar  manner.  When 
the  debits  are  finished,  begin  with  the  first  of  the  credits  and 
post  them  according  to  the  same  routine. 

Check  your  posting  by  going  over  all  of  the  transactions 
in  the  journal  and  tracing  them  to  the  ledger  to  see  if  you  have 
made  any  error  or  omission.  When  you  discover  an  item  to  be 
correctly  posted,  place  a  very  small  pencil  dot  or  check  mark 
on  the  double  line  just  to  the  left  of  the  amount  in  both  the 
journal  and  ledger. 

Take  a  trial  balance. 

You  should  be  able  to  answer  the  following  questions : 

What  is  journalizing? 

What  is  the  routine  for  posting? 

When  is  posting  usually  done  ? 

Apply  each  of  the  three  following  questions  to  each  of  the 
accounts  in  your  ledger: 

(a)  What  does  the  total  debit  show? 

(b)  What  does  the  total  credit  show? 

(c)  What  does  the  difference  between  the  total  debit  and 
total  credit  show? 

Present  all  of  your  work  for  inspection.  Carefully  pre" 
serve  your  work  for  this  set.    You  will  need  it  later. 


21 


FORWARDING  OF  ACCOUNTS. 

Whenever  the  space  allotted  to  any  account  is  within  one 
or  two  lines  of  being  filled  on  either  the  debit  or  credit  side,  it 
should  be  forwarded  to  a  new  page.  To  forward  the  account, 
rule  single  lines  in  the  usual  manner.  Place  the  totals  of  the 
debits  and  credits  in  the  space  immediately  below  the  single 
line,  writing  in  the  explanatory  column  the  word  "Forward," 
and  in  the  page  column  the  ledger  page  on  which  the  new  ac- 
count is  to  be  opened.  The  practice  as  to  dating  the  forward- 
ing entries  varies ;  however,  it  would  do  no  harm  to  use  the  date 
of  forwarding.  Rule  the  usual  double  lines  below  the  foot- 
ings. On  the  page  to  which  the  account  is  forwarded  or  on 
.rhich  the  new  account  is  opened,  on  the  first  line  bring  the 
totals  of  the  debit  and  credit  with  the  same  date,  writing  in 
the  explanation  column  "Brought  forward,"  and  in  the  page 
column  the  ledger  page  from  which  they  are  brought.  The 
footings  and  details  in  the  account  being  forwarded  may  be 
in  red  ink,  while  in  the  new  account  they  appear  in  black  ink. 
Bookkeepers  do  not,  however,  generally  follow  the  practice  of 
using  red  ink  in  forwarding  accounts. 

See  illustration  below. 


3 

f 

f 


.3^ 


3V 


All. 


.^^<^^r8-t<:^ 


^ 


tA 


T 


2^^ 


/f- 


/I 

/ 

f 

/  ^ 


//I 


/. 


/ 


\3o 


^ 


z. 


:£2^ 


/  ^'a 


AA 


T 


/^^,^-^^<#€ea^KS-<*i^i^^t-'2^^-' 


/^a,^e  76 


yf— 


;^ 


// 


7 


/a 


-7^ 


JZ^ 


22 

X.— J.  OSCAR  DWIGHT. 

Journalize  the  following  transactions;  be  sure  to  make 
your  work  accurate  and  complete  in  all  details;  remember  to 
ask  yourself  concerning  each  transaction,  "What  account  re- 
ceives or  costs  value?"  and  "What  account  produces  or  gives 
value?" 

March  1.  J.  Oscar  Dwight  engages  in  the  Flour  and  Grain 
business,  at  516  Towne  St.,  investing  $2500  in  cash. 

Paid  Henry  Le  Sage  one  month's  rent  in  advance,  as  per 
previous  agreement,  $65. 

Bought  for  cash  2000  bu.  oats  at  30  cts.  per  bu. 

Bought  of  the  W.  Thyne  Co.,  for  cash,  stationery,  books, 
etc.,  for  use  in  the  business,  $18.65. 

2.  Bought  of  C.  S.  Huff  &  Co.,  on  account,  300  bbls.  flour 
at  $4.07  per  bbl. ;  500  bu.  oats  at  31  cts.  per  bu. 

Bought  of  R.  Miler,  on  account,  500  bu.  rye  at  50  cts. 

3.  Sold  A.  Williams  &  Co.,  on  account,  450  bu.  oats  at  39 
cts. ;  100  bu.  rye  at  60  cts. 

5.  Paid  C.  S.  Huff  &  Co.,  on  account,  $600. 

6.  Bought  of  King  &  Hicks,  on  account,  1500  bu.  corn  at 
35  cts. 

7.  Paid  freight  on  corn  bought  of  King  &  Hicks,  $12.45. 

Note:  Freight  and  drayage  paid  on  merchandise  which  has  been  pur- 
chased, is  usually  considered  as  a  part  of  the  cost  of  the  merchandise  and 
therefore   charged   direct   to   the   merchandise    account. 

Sold  D.  0.  Sage  &  Co.,  on  account,  500  bu.  corn  at  41  cts., 
60  bbls.  flour  at  $4.55. 

8.  Sold  K.  E.  Fitch  &  Co.,  on  account,  250  bu.  corn  at  42 
cts.,  425  bu.  oats  at  37  cts. 

9.  Mr.  Dwight  (proprietor)  has  withdrawn  from  the  busi- 
ness, for  his  private  use,  $30  cash. 

Note:  Bookkeeping  entries  should  always  give  the  initials  or  given 
name  of  individuals. 

10.  Bought  of  King  &  Hicks,  on  account,  950  bu.  corn  at 
35  cts.  per  bu. ;  325  bu.  rye  at  53  cts. 

Paid  C.  S.  Huff  &  Co.,  to  apply  on  account,  $150. 
12.     Sold  to  A.  R.  Land,  on  his  note  at  10  days,  56  bbls. 
flour  at  $4.63. 


23 

The  note  referred  to  iu  this  transaction  is  a  written  instru- 
ment, signed  by  Mr.  Laud,  in  which  he  promises  to  pay  $259.28 
in  ten  days.     Following  illustration  shows  the  form  of  the  note : 

^/£/,r^^^^  C/.  C^^  ^  ^  ^  y  .<^^^.^-^^^^  -^ — — "— — — , 
^/^  -^^^^  ^^«^^^  ^y  ~-^—^-^~^ — — "^-^-^^-^ — . 

In  business,  written  obligations  to  pay  money  at  a  future 
time  are  a  higher  form  of  value  than  oral  promises.  It  is  bet- 
ter to  have  a  man's  written  promise  than  his  spoken  one.  For 
this  reason  the  bookkeeper  must  classify  written  obligations 
in  such  manner  as  to  keep  them  separate  from  oral  promises, 
which  are  entered  in  personal  accounts.  Written  obligations, 
payable  in  money  at  a  future  time,  when  in  favor  of  our  busi- 
ness (that  is,  promising  payment  to  us)  are  classified  as  Bills 
Receivable.  AYhen  the  obligations  are  made  by  our  business 
(we  promising  to  make  the  payment  to  others  )they  are  classi- 
fied as  Bills  Payable.  The  same  questions  and  rules  that  you 
have  been  using  in  all  of  your  transactions  apply  to  Bills  Re- 
ceivable and  Bills  Payable.  In  the  above  sale  to  Mr.  Land, 
what  account  receives  or  costs  value?  What  account  produces 
or  supplies  value  ? 

13.  Sold  A.  Williams  &  Co.,  on  their  note  at  15  days,  125 
bbls.  flour  at  $4.61. 

14.  D.  0.  Sage  &  Co.,  who  owe  us  $478  for  invoice  of  the 
seventh,  asks  us  to  accept  their  note  at  30  days  in  payment  of 
the  account.     Mr.  Dwight  has  agreed  to  do  this. 

Note:  We  now  have  their  written  promise  or  note  instead  of  their  oral 
promise  as  shown  by  their  account.  Think  out  carefully  how  this  affects 
Bills  Receivable  and  D.  O.  Sage  &  Co.'s  accounts. 

15.  K.  E.  Fitch  &  Co.  send  us  their  note  of  $100,  due  in 
10  days,  to  apply  on  account. 


24 

16.  Bought  of  C.  S.  Huff  &  Co.,  150  bbls.  flour  at  $4.02, 
480  bu.  corn  at  36  cts.,  on  account. 

17.  Sold  Fulton  Judd,  420  bu.  oats  at  37  cts.,  250  bu.  corn 
at  41  cts.,  on  his  note  at  two  months. 

19.  Bought  of  King  &  Hicks,  on  our  note  at  5  days,  250 
bbls.  flour  at  $4.01,  450  bu.  corn  at  34  cts. 

Note:  We  are  here  issuing  our  written  promise  to  pay.  How  Is  this 
promise   classified?     Carefully   apply  your  questions. 

20.  Bought  of  Fallis  &  Ware,  on  our  note  at  5  days,  500 
bu.  corn  at  36  cts. 

21.  Sold  W.  A.  Glass,  75  bbls.  flour  at  $4.65,  250  bu.  corn 
at  39  cts.,  received  in  payment  his  note  at  60  days. 

22.  Sold  Jas.  D.  Southfield,  50  bbls.  flour  at  $4.66,  410  bu. 
corn  at  39  cts.,  on  account. 

23.  Bought  of  Willis  A.  Hicks,  500  bu.  oats  at  34  cts., 
800  bu.  corn  at  34  cts.,  gave  in  payment  our  note  at  45  days. 

Sold  D.  Rose  &  Bro.,  on  account,  65  bbls.  flour  at  $4.62. 
Received  of  A.  R.  Land,  in  full  for  his  note  of  the  12th  inst., 
$259.28  cash. 

Note:  You  are  now  receiving  cash  for  a  written  promise.  Tour  answer 
to  the  question,  "What  account  produces  or  supplies  value?"  must  neces- 
sarily be  Bills  Receivable,  as  it  is  the  written  promise  of  another  in  favor 
of  our  business  which  is  being  paid. 

24.  Received  of  K.  E.  Fitch  &  Co.,  in  payment  of  their 
note,  due  tomorrow,  $100. 

Paid  our  note  of  the  19th  inst.  in  favor  of  King  &  Hicks. 

Note:     What  kind  of  an  obligation  are  we  paying?     How  is  it  classified? 

Paid  our  note  in  favor  of  Fallis  &  Ware,  dated  March  20th. 

26.  Received  of  K.  E.  Fitch  &  Co.,  to  apply  on  account, 
their  note  at  60  days  for  $150. 

Mr.  Dwight  has  transferred  W.  A.  Glass'  note  of  the  21st 
inst.,  for  $446.25,  to  C.  S.  Huff  &  Co.,  to  apply  on  account. 

Note:  Instead  of  holding  this  Bills  Receivable  until  it  is  due,  collecting 
it,  and  then  paying  our  account  in  favor  of  Huff  &  Co.,  they  have  consented 
to  take  the  note  at  its  face  value  as  part  payment  of  the  account.  Apply 
your  questions  carefully. 

27.  Received  of  A.  Williams  &  Co.,  in  payment  of  their 
note  of  13th  inst.,  $576.25. 

Gave  King  &  Hicks,  to  apply  on  account,  our  note  of  $300, 
due  in  10  days. 


25 

Paid  freight  and  drayage  bills  to  date,  $28.50. 

28.  Mr.  Dwiglit  has  taken  from  the  store,  for  his  own  use, 

1  bbl.  flour  at  $4.01. 

29.  Bought  of  Henry  Le  Sage  the  store  and  lot  we  are 
now  occupying.     Gave  in  payment  $500  cash  and  a  note,  due  in 

2  years,  for  $4500. 

It  is  customary  to  carry  investments  in  land  and  buildings 
in  real  estate  accounts.  In  order  to  determine  the  income,  ex- 
pense, gain  or  loss,  on  each  separate  piece  of  real  estate,  it  is 
necessary  to  have  a  separate  account  with  each  separate  piece, 
so  as  to  distinguish  this  property  from  other  property  that 
might  be  bought  later,  we  will  open  this  account  as  "Real  Es- 
tate, 516  Towne  St."  The  rules  used  for  debiting  or  crediting 
real  property  accounts  are  the  same  as  used  for  other  accounts. 
Two  things  are  given  in  this  transaction  (cash  and  note)  to 
secure  one  thing  (real  estate),  so  our  entry  must  show  one 
debit  and  two  credits  and  will  appear  in  the  journal  in  the 
following  form: 

Real  Estate,  516  Towne  St.  5000 

Cash  500 

Bills  Payable  4500 

Entries  having  more  than  one  debit  or  more  than  one 
credit  are  of  frequent  occurrence.  Why  is  real  estate  debited? 
Why  are  cash  and  bills  payable  credited? 

30.  Received  of  A.  Williams  &  Co.,  cash  in  full  of  account. 

31.  Paid  clerk  hire,  $28. 

Present  your  journalizing  for  inspection. 


XI. 


Take  two  sheets  of  ledger  paper  and  number  the  pages. 
Open  accounts  in  the  following  order,  allowing  1/2  page  for  each 
account :  J.  Oscar  Dwight,  Proprietor ;  Cash,  Merchandise,  Ex- 
pense. Bills  Receivable.  Bills  Payable.  C.  S.  Huff  &  Co.,  R.  Mil- 
ler, King  &  Hicks,  A.  Williams  &  Co.,  D.  0.  Sage  &  Co.,  K.  E. 


26 

Fitch  &  Co.,  Jas.  D.  Southfield,  D.  Rose  &  Bro.,  Real  Estate, 
516  Towne  St. 

Post  the  items  from  your  journal. 

Check  your  posting. 

Foot  your  ledger  accounts  in  small  pencil  figures. 

Take  a  trial  balance.  Instead  of  putting  the  total  debit 
and  the  total  credit  of  each  account  both  in  the  trial  balance  as 
heretofore,  take  the  difference  between  the  debit  and  credit  of 
each  account  and  place  only  this  difference  in  the  trial  balance. 
To  illustrate :  Suppose  the  total  debit  of  the  cash  account  is 
$526.73  and  the  total  credit  $313.52,  the  difference  then  is 
$213.21,  which  amount  place  in  the  debit  column  of  the  trial 
balance  opposite  the  name  of  the  account.  Be  careful  to  place 
the  difference  of  each  account  on  the  debit  side  of  the  trial  bal- 
ance if  the  debit  footing  is  the  larger,  on  the  credit  side  of  the 
trial  balance,  if  the  credit  footing  is  the  larger. 

You  should  now  be  able  to  answer  the  following  questions 
concerning  each  of  the  accounts  in  your  ledger: 

(a)  What  does  the  total  debit  show? 

(b)  What  does  the  total  credit  show? 

(c)  What  does  the  difference  between  the  total  debit  and 
the  total  credit  show? 

Present  your  work  for  inspection. 


XII.— FINANCIAL  STATEMENTS. 

You  will  now  make  a  statement  showing  the  resources  and 
liabilities  of  the  business.  Anything  of  value  which  the  busi- 
ness owns,  controls  and  can  dispose  of,  is  a  resource.  Any- 
thing that  the  business  owes,  or  is  liable  for,  is  a  liability.  Fol- 
low instructions  carefully,  step  by  step.  Take  one-half  sheet 
of  journal  paper,  write  across  the  top,  "Resources  and  Liabili- 
ties, Mar.  31,  19 ,"  and  at  the  top  of  the  left-hand  money  col- 
umn "Resources,"  and  the  right-hand  column  "Liabilities." 
You  have  been  applying  to  the  ledger  accounts  the  questions: 
(a)     What  does  the  total  debit  show?     (b)     What  does  the 


27 

total  credit  show?  (c)  What  does  the  difference  between  the 
total  debit  and  credit  show?  Now  add  one  more  question,  (d) 
Is  the  difference  a  resource  or  a  liability? 

Begin  with  the  Cash  account ;  write  the  page  and  name  of 
the  account  on  your  statement  the  same  as  for  a  trial  balance ; 
determine  by  the  above  questions  whether  it  shows  a  resource 
or  a  liability  and  place  the  amount  in  the  proper  column. 
(See  illustrative  statement,  page  30.) 

Mr.  Dwight  has  gone  over  all  of  the  property  belonging 
to  the  business  and  carefully  determined  the  amount  on  hand 
and  its  worth  at  the  close  of  business  March  31,  to  be  as  follows: 

Merchandise. 

1705  bu.  Oats  33        $562.65 

725  bu.  Rye 50  362.50 

3020  bu.  Corn  „ 35        1057.00 

208  bbls.  Flour  4.02  836.16     $2818.31 

Real  Estate. 

Real  Estate,  516  Towne  St.  $5000.00 

A  list  of  property  on  hand,  like  the  above,  is  called  an  in- 
ventory. 

In  the  Merchandise  account,  the  debit  shows  the  total  pur- 
chases, the  credit,  the  total  sales,  and  the  difference  the  excess 
of  purchases  over  sales;  but  as  merchandise  is  not  sold  at  the 
same  price  for  which  it  is  bought,  the  worth  of  the  stock  on 
hand  is  not  the  same  as  the  balance  of  the  account.  To  get 
the  worth  of  the  merchandise  on  hand  refer  to  the  inventory 
above.  Determine  whether  this  inventory  shows  a  resource  or 
a  liability  and  enter  it  accordingly  on  your  statement. 

The  next  account  in  your  ledger,  Expense,  shows  the  cost 
of  things  used  up  in  carrying  on  the  business.  As  these  things 
have  been  used  up,  they  can  not  now  be  a  resource,  and  as  they 
were  paid  for  during  the  month,  they  can  not  be  a  liability. 
Leave  the  account  out  of  the  statement,  as  it  shows  neither  a 
resource  nor  a  liability. 

Bills  Receivable  is  the  next  account  in  your  ledger.  Ap- 
ply the  questions  (a,  b,  c,  d,)  and  place  the  account  on  your 
statement  in  accordance  with  your  answers. 


28 

Continue  through  your  ledger  applying  the  questions  (a, 
b,  c,  d,)  to  each  of  the  remaining  accounts.  If  the  accounts 
show  resources  or  liabilities,  place  them  on  your  statement, 
otherwise  leave  them  out. 

Foot  in  pencil  the  resource  and  liability  columns  of  your 
statement.  It  is  evident  that  the  footing  of  the  resource  col- 
umn shows  all  of  the  value  owned  or  controlled  by  the  business, 
while  the  footing  of  the  liability  column  shows  all  that  is  owed 
by  the  business.  The  difference  between  the  resources  and  lia- 
bilities is  what  the  business  is  worth,  or  it  is  the  proprietor's 
interest  in  the  business  and  is  called  his  present  worth.  Write 
on  the  first  blank  line  of  your  statement,  in  red  ink,  "J.  Oscar 
Dwight's  Present  AVorth,"  and  place  the  amount  in  the  liabil- 
ity column.  Rule  and  foot  the  statement  in  the  same  manner 
as  a  trial  balance. 

You  will  now  make  a  statement  of  losses  and  gains.  Ac- 
counts which  have  cost  the  business  value  and  have  not  pro- 
duced as  much  as  they  have  cost,  and  will  not  in  the  future 
produce  any  more  on  this  cost,  show  loss.  Accounts  which 
have  produced  more  than  they  have  cost,  and  will  not  in  the  fu- 
ture cost  more  on  what  they  have  already  produced,  show  gain. 

On  one-half  sheet  of  journal  paper  write  the  heading 
"Losses  and  Gains,  Mar.  31,  19 ,"  and  at  the  top  of  the  left- 
hand  money  column  "Losses,"  and  the  right-hand  column 
"Gains."  Those  accounts  in  your  ledger  of  which  the  entire 
difference  shows  either  a  resource  or  a  liability  can  not,  of 
course,  show  loss  or  gain.  This  leaves  for  the  statement  of 
losses  and  gains  only  such  accounts  as  are  not  entirely  used  in 
the  statement  of  resources  and  liabilities. 

The  debit  of  the  merchandise  account  shows  total  pur- 
chases or  cost.  The  credit  side  of  the  account  shows  total  sales. 
The  sales  added  to  the  inventory  (goods  on  hand)  shows  what 
all  of  the  merchandise  has  been  worth  to  the  business,  this  sum 
compared  with  the  cost  will  show  the  gain  or  loss  on  the  mer- 
chandise. Find  the  gain  in  the  merchandise  account  on  your 
statement  in  the  same  form  as  shown  in  illustrative  statement. 


29 

Add  to  your  ledger  question  "d"  the  words  "loss  or  gain," 
and  then  apply  all  of  the  questions  (a,  b,  c,  d,)  to  the  Expense 
account  and  enter  it  properly  on  your  statement. 

Since  all  the  rest  of  the  accounts,  excepting  the  proprie- 
tor's, show  nothing  but  resources  and  liabilities,  you  will  now 
find  the  difference  between  the  losses  and  gains.  This  differ- 
ence is  the  net  gain  for  the  month,  enter  it  on  your  statement 
in  the  same  manner  as  shown  on  the  illustrative  statement. 

Mr.  Dwight  invested  $2500  and  withdrew  $34.01,  which 
leaves  his  net  credit  $2465.99.  Add  to  his  net  credit,  $2465.99, 
the  net  gain  for  the  month,  $69.30,  and  the  sum  in  his  present 
worth,  $2535.29.  This  present  worth  must  agree  with  the  pres- 
ent worth  as  shown  on  the  statement  of  resources  and  liabili- 
ties.    (See  illustrative  statement.) 

You  should  now  be  able  to  answer  the  following  questions: 

What  is  a  resource?     Liability? 

In  what  two  ways  can  the  proprietor's  present  worth  be 
found?     What  is  an  inventory? 

Present  your  statements  for  inspection. 


30 


s3 


'^^^^c^yl.c.e.^  %^.^^sL^J^^&Uf,  '^a^  s/.  /f- 


Cf—z^t/-C^ 


y^CA^e^-r-)^ 


7 


c^  yiH   y^/.iZy^'iyd-^iiiy'  '^a.<£.^''?^t^  ^C^,!^-!^^:^^ 


J 


^l^^a 


/«*/////« 


-aa?. 


^litM. 


t2J 


•iS2-*--»--t/ 


31 


XIIL— FINANCIAL   STATEMENTS  FROM  ACCOUNT 

BALANCES. 

Note  to  Teacher:  The  Instructions  of  this  chapter  apply  to  finding 
losses  and  gains  when  only  the  balances  of  accounts  are  known.  It  Is  bet- 
ter not  "o  take  them  up  until  after  those  of  the  preceding  chapter  have 
been   used    many   times. 

The  following  outline  shows  some  of  the  things  that  enter 
into  the  two  sides  of  an  account  (a),  how  they  are  modified 
in  the  analysis  of  the  account  (b),  and  what  the  result  shows 

(c). 

ACCOUNT. 


Cost: 

Purchase  price, 

Freight, 

K^pairs, 

Improvements, 

Insurance, 

Taxes,  etc. 


(a)  Contents. 

Production: 

Sales, 
Earnings,  etc. 


Liability  Inventory: 

Things  that  have  been  used  but 
not  yet  charged,  etc. 


(b)  Modifications. 

Resource  Inventory: 
Goods  on  hand. 

Things  earned  but  not  yet  cred- 
ited, etc. 
(c)  Result. 
If  a  debit  balance,  Loss.  |      If  a  credit  balance.  Gain. 

A  debit  balance  shows  that  the  cost  of  the  account  has 
exceeded  the  production  by  the  amount  of  the  balance.  In 
case  of  property  accounts,  this  might  seem  to  mean  that  the 
debit  balance  represents  the  value  of  the  property  left  on 
hand  but.  in  fact,  the  present  value  of  the  property  left  on 
hand  is  shown  by  the  inventory.  Therefore,  if  the  debit  bal- 
ance is  greater  than  the  inventory  the  account  will  show  a 
loss;  if  it  is  less  the  account  will  show  a  gain. 

A  credit  balance  shows  that  the  production  of  the  account 
has  exceeded  the  cost  by  the  amount  of  the  balance.  In  the 
case  of  property  accounts,  this  would  mean  that  the  credit 
balance  is  a  gain  and  if  there  is  still  some  property  on  hand 
as  shown  by  the  inventory  this  would  still  further  increase 
the  gain  by  the  amount  of  the  inventory. 

You  should  bear  in  mind  that  out  of  the  cost  oi  a  prop- 
erty account  comes  the  production  (sales)  and  the  inventory 
(value  of  unsold  goods  on  hand). 


32 

In  allowance  accounts,  such  as  interest,  discount,  etc., 
debit  balances  show  excess  of  cost,  credit  balances  excess  of 
production.  There  may  be  inventories  in  these  accounts  which 
increase  either  the  cost  or  production  and  affect  the  balance 
accordingly.  Of  course  the  final  excess  of  cost  indicates  loss, 
while  excess  of  production  indicates  gain. 

In  accounts  showing  indebtedness,  such  as  Bills  Receivable, 
Bills  Payable,  and  personal  accounts,  a  debit  balance  or  excess 
of  cost  over  production  merely  shows  an  indebtedness  to  us 
which  will  eventually  be  made  up,  therefore  a  resource.  A 
credit  balance  shows  just  the  reverse. 


XIV. 

You  will  now  make  financial  statements  for  James  D.  Nor- 
ton's business,  Feb.  1  to  13.  The  inventory  of  merchandise  on 
hand  Feb.  13  is  $1610.40. 

Read  over  carefully  the  instructions  for  the  statement 
which  you  have  just  finished.  They  will  apply  equally  well  to 
this  work  although  the  amounts  are  different. 

Present  your  work  for  inspection. 


XV. 

Make  financial  statements  for  A.  J.  Law's  business,  Feb. 
15  to  27.  The  inventory  of  merchandise  on  hand  Feb,  27  is 
$905.80.    Follow  the  same  order  as  in  the  preceding  statements. 

Present  your  work  for  inspection. 


XVI. 

Make  financial  statements  for  M.  H.  Winters'  business, 
Feb.  1  to  14.  The  merchandise  on  hand  Feb.  14  is  valued  at 
$3049.50.  Rent  and  other  items  charged  to  Expense  but  not 
entirely  used  up  are  worth  $48.10. 

Present  your  work  for  inspection. 


33 


o<y  ^'^^'^'f-'i-'^^,  ^^y^-^t^:^^ 


/y 


^/ 


^^i«-»»*^^^4-«S>t 


SJra 


*«,^ 


^iZ. 


=J2. 


vT? 


?7 


/ 


/ 

7 


6f\3. 


JJ3 


y^'' 


^^<?-*7 


;2<' 


^/ 


/9  — 


A*v 


/ 


4/ 


<i^42 


^J-i\i-/0 


^im 


j^Mt^ 


>9  - 


J 
/J 


i^- 


/< 


£^1^5; 


JLa 


cy 


'^o 


'/i 


'x^^.'t<:v=^«-^»^-t=5J^^:^^ 


'T^ 


''?ficz^- 


x^**-**r 


£i=.,.,^^^ 


yjZ^-t^tt<^^-\^ 


/ 


// 


2a2Z£ 


^:?^ 


\3/ 


r3^>»».<#y2-2$-4-^ 


^^ 


^ 
f 


^c7£_ 


^9  — 


^^^f/^ii^  h^- 


S/ 


c5^-«*-<2-<^ 


/ 


.^7 


'hjj. 


/' 


»:?''ia-«--?-^x' 


7 


'?'-t- 


%^' 


=t= 


/ 


7" 


^£Z. 


\'AA 


^■^ 


"Tuuzif  S/ 


^^^^ 


:r'^/ 


* 


■/iy 


34 

X\ai.— LEDGER  CLOSINGS. 

You  will  now  close  the  accounts  which  show  either  loss  or 
gain.  In  making  the  closing  entries  in  the  ledger,  write  all 
items  that  are  to  be  transferred  to  another  place  in  RED  ink. 
These  items,  after  being  transferred,  are  written  in  BLACK  ink 
in  their  permanent  positions.  Items  that  are  to  be  transferred 
and  are  entered  in  RED  ink  ALWAYS  CROSS  OVER  to  the 
opposite  side  of  the  ledger  in  the  process  of  transfer  and  appear 
in  BLACK  ink. 

You  have  in  your  posting  work,  placed  in  the  ledger  the 
number  of  the  journal  page  from  which  an  item  is  posted  to 
show  where  it  came  from.  Also,  you  have  placed  the  ledger 
page  in  the  journal  to  show  where  the  item  is  posted  to.  Like- 
wise, in  closing  the  ledger,  place  in  the  red  ink  items  that  are  to 
be  transferred  to  another  page,  the  ledger  page  to  which  trans- 
fer is  made.  In  the  black  ink  items,  place  the  ledger  page  from 
which  the  item  has  been  transferred.  If  the  entries  do  not 
change  pages,  but  are  brought  down  on  the  same  page,  it  is 
not  necessary  to  use  the  ledger  page  number. 

Begin  with  merchandise.  The  debit  side  shows  all  the 
merchandise  bought.  The  credit  side  shows  all  of  the  merchan- 
dise sold.  To  close  the  account,  the  inventory  is  added  to  the 
credit  side,  thus  showing  the  entire  worth  of  merchandise  to 
the  business.  Write  on  the  first  blank  line  of  the  credit  side 
in  red  ink,  "Mar.  31,  Inventory  $2818.31."  (See  illustration, 
page  33.)  Since  the  total  debit  is  now  smaller  than  the  credit 
of  the  account,  it  shows  a  gain  equal  to  the  difference  (as  mer- 
chandise has  been  worth  more  to  the  business  than  it  cost.) 
Write  on  the  first  blank  line  of  the  debit  side,  in  red  ink,  "Mar. 
31,  Gain  $180.95."  (See  illustrative  closing.)  Now  rule  and 
foot  the  account.  REMEMBER  the  ruling  is  in  red  and  al- 
ways on  the  same  horizontal  blue  line,  the  single  lines  extend 
only  across  the  money  columns  above  the  footings,  the  double 
lines  extend  across  all  except  the  explanation  columns  and  are 
on  the  first  blue  line  below  the  footings  and  the  single  line,  the 
footings  are  in  black  ink.     (See  illustrative  closing.) 


35 

A  double  entry  ledger  should  always  be  in  balance  (total 
debits  equal  to  the  total  credits.)  You  added  the  inventory 
to  the  credit  without  putting  a  like  amount  on  the  debit.  By 
transferring  the  inventory  to  the  debit  side  of  the  account,  you 
will  off-set  its  addition  to  the  credit  and  at  the  same  time  show 
the  amount  of  merchandise  on  hand  at  the  beginning  of  the 
next  day's  business.  Write  on  the  first  blank  line  below  the 
closing,  in  black  ink,  on  the  debit  side,  "Apr.  1,  Inventory 
2818.31."  REMEMBER  all  red  ink  entries  made  in  your  led- 
ger must  be  transferred  to  the  opposite  side  of  the  account  in 
which  made,  or  to  the  opposite  side  of  some  other  account,  be- 
fore the  closing  of  the  account  is  complete  and  the  ledger  re- 
stored to  a  balance. 

One  of  the  objects  in  closing  the  ledger  is  to  gather  the 
losses  and  gains  together.     To  do  this,  open  a  Loss  and  Gain 
account  at  some  convenient  place  in  your  ledger.     You  have 
entered  the  gain  on  merchandise  in  the  merchandise  account 
on  the  debit  side  in  red  ink.     Now  transfer  that  amount  to  the 
credit  side  of  the  Loss  and  Gain  account.     Write  on  the  credit 
side  of  the  Loss  and  Gain  account,  in  black  ink,  "Mar.  31,  Mer- 
chadsie  180.95."    You  write  the  word  "merchandise"  in  the 
loss  and  gain  account  to  show  in  what  account  the  gain  oc- 
curred, also  place  in  the  folio  column  the  page  of  the  ledger  on 
which  the  merchandise  account  is  found.     Turn  to  your  Mer- 
chandise account,  and  place  the  page  of  the  Loss  and  Gain  ac 
count  in  the  folio  column  after  the  word  "Gain"  to  show  where 
the  amount  was  transferred  to.     (See  illustrative  closing.) 

You  will  now  close  the  Expense  account.  Does  this  ac- 
count show  a  gain  or  loss?  Why?  Write  on  the  credit  side, 
in  red  ink,  "Mar.  31,  Loss  111.65."  Read  again,  under  the  in- 
structions for  closing  the  merchandise  account,  what  you  were 
told  to  remember  concerning  ruling.  Rule  and  foot  the  account 
in  the  same  manner  as  the  merchandise  account  has  been  ruled 
and  footed.  Be  sure  to  get  your  ruling  on  the  same  horizontal 
blue  lines.  Now  transfer  the  loss  to  the  Loss  and  Gain  ac- 
count. Write  on  the  debit  side  of  the  Loss  and  Gain  account, 
in  black  ink,  "Mar.  31,  Expense  111.65,"  and  put  in  the  page  of 


36 

the  Expense  account;  also  put  the  page  of  the  Loss  and  Gain 
account  in  the  Expense  account.  (See  illustrative  closing.) 
Why  is  the  word  "Expense"  written  in  the  Loss  and  Gain 
account? 

If  you  refer  to  your  statement  of  losses  and  gains,  you  will 
see  that  you  have  closed  all  of  the  accounts  which  show  either 
loss  or  gain  into  the  Loss  and  Gain  account.  Now  it  is  neces- 
sary to  close  the  loss  and  gain  account,  so  as  to  give  the  gain 
to  the  proprietor,  to  whom  it  belongs.  Write  on  the  debit  side 
of  the  Loss  and  Gain  account,  in  red  ink,  "Mar.  31,  J.  Oscar 
Dwight  69.30."  Review  your  instructions  for  ruling.  Rule  and 
foot  the  account.  Place  in  the  folio  column  the  page  of  the 
J.  Oscar  Dwight  account,  so  as  to  show  where  the  net  gain  has 
been  carried.  Write  on  the  credit  side  of  J.  Oscar  Dwight 's 
account,  in  black  ink,  "Mar.  31,  Net  Gain  69.30,"  and  the  page 
of  the  Loss  and  Gain  account.  Write  on  the  debit  side  of 
Dwight 's  account,  in  red  ink,  "Mar.  31,  Present  Worth, 
2535.29."  Rule  and  foot  the  account.  Bring  the  Present  Worth 
down  on  the  credit  side.  Why?  Write,  in  black  ink,  "April  1, 
Present  Worth  2535.29."     (See  illustrative  closing.) 

This  paragraph  is  important.  The  closing  of  the  ledger 
must  always  follow  the  same  routine  as  above.  Collect  the 
losses  and  gains  from  all  accounts  showing  either  loss  or  gain 
into  the  Loss  and  Gain  account.  Then  carry  the  Net  gain  to 
the  Proprietor's  account.  The  ledger  closing  is  separate  and 
independent  of  the  making  of  the  financial  statements  although 
it  shows  the  same  results. 

The  following  illustration  is  designed  to  show  graphically 
this  process.  Think  of  an  account  as  a  receptacle  containing 
the  record  of  a  certain  kind  of  property.  Then  the  receptacle 
containing  the  record  of  Merchandise,  at  the  end  of  a  certain 
period,  will  have  in  it  the  cost  and  sales.  To  close  the  account, 
we  bring  in  the  Inventory  and  draw  off,  as  it  were,  from  the 
receptacle  the  loss  or  gain  into  the  Loss  and  Gain  account.  In 
the  same  manner,  gather  the  losses  and  gains  from  other  ac- 
counts, wherever  any  occur,  into  the  Loss  and  Gain  account. 
Of  course,  the  difference  between  all  of  the  losses  and  gains,  as 


37 


shown  in  the  Loss  and  Gain  account,  is  the  Net  Loss  or  Net 
Gain.  The  Net  Loss  or  Net  Gain  belongs  to  the  proprietor's  ac- 
count, hence  draw  off  the  Net  Loss  or  Net  Gain  from  the  Loss 
and  Gain  account  into  the  Proprietor's  account. 

s\\o\y\Y\c^  \os'ies  or  o^a\rvs 


'^x'0^Y\eY0YS*\c/ 


You  will  also  close  the  Cash  account.  On  the  credit  side, 
in  red  ink,  write  "Mar.  31,  Balance  302.93."  (See  illustrative 
closing.)  Rule  and  foot.  Bring  the  balance  down  on  the  debit 
side,  in  black  ink,  as  follows:  "Apr.  1,  Balance  302.93."  This 
account  is  closed  to  show  how  much  cash  we  have  on  hand  at 
the  end  of  the  month. 

The  closing  of  personal  accounts  varies  in  business.  Some 
concerns  rule  and  foot  personal  accounts  whenever  they  bal- 
ance.    Some  close  them  only  once  a  year  when  the  books  are 


38 

closed,  thus  showing  by  the  closing  the  volume  of  business 
transacted  with  that  particular  person  or  firm.  Others  close 
them  every  month  so  that  the  sections  of  the  account  will  cor- 
respond with  the  monthly  statements.  No  matter  which  plan 
is  followed,  the  work  of  closing  is  performed  in  the  same  man- 
ner. When  closing  personal  accounts,  do  the  work  in  the  same 
manner  as  when  closing  the  cash  account.  Follow  your  teach- 
er's instructions  whether  or  not  to  close  the  personal  accounts. 

REMEMBER  concerning  ledger  closings  that  transfer  en- 
tries are  in  red;  transferred  entries  in  black;  and  ledger  page 
numbers  are  used  to  show  from  what  page  or  to  what  page  the 
items  are  transferred. 

You  should  now  be  able  to  answer  the  following  questions : 

What  color  is  used  for  closing  entries? 

What  color  is  used  for  the  transferred  entries? 

What  accounts  have  been  closed? 

What  does  the  difference  between  the  two  sides  of  the  Loss 
and  Gain  account  show? 

Where  is  the  net  gain  carried?    Why? 

How  is  the  proprietor's  account  closed? 

Where  should  the  inventory  of  merchandise  appear  after 
the  ledger  is  closed? 

Present  your  work  for  inspection. 


XYIII. 

You  will  now  close  the  ledger  for  the  business  of  which 
James  D.  Norton  is  the  proprietor,  Feb.  1  to  13.  Use  the  ledger 
that  you  have  already  prepared  for  this  set.  The  inventory 
of  merchandise  on  hand,  Feb.  13,  is  $1610.40. 

Read  over  carefully  the  instructions  for  the  closing  which 
you  have  just  finished,  if  you  have  any  difficulty.  They  will 
apply  equally  well  to  this  work  although  the  amounts  are  dif- 
ferent.   Present  your  work  for  inspection. 


39 
'  XIX. 

You  will  now  close  the  ledger  for  the  business  of  which 
A.  J.  Laws  is  the  proprietor,  Feb.  15  to  27.  Use  the  ledger 
which  you  have  already  prepared  for  this  business.  The  in- 
ventory of  merchandise  on  hand,  Feb.  27,  is  $905.80.  Follow 
the  same  order  as  indicated  for  the  Dwight  set.  Present  your 
work  for  inspection. 


XX. 

You  will  now  close  the  ledger  for  the  business  of  which 
M.  H.  Winters  is  the  proprietor,  February  1  to  14.  Use  the 
ledger  which  you  have  already  prepared  for  this  business.  The 
merchandise  on  hand  is  valued  at  $3049.50.  Rent  and  other 
items  charged  to  Expense  but  not  entirely  used  up  are  worth 
$48.10. 

Present  your  work  for  inspection. 

INTEREST  AND  DISCOUNT. 

Note:  This  chapter  is  intended  as  an  arithmetical  drill  in  figuring  in- 
terest by  the  60-day  or  Bankers'  Method  and  presupposes  a  working  knowl- 
edge of  common  and  decimal  fractions. 

The  owner  of  money  frequently  allows  others  to  use  his  money  for 
a  period  of  time  receiving  in  return  a  certain  compensation  for  its  use. 
If  the  compensation  for  the  use  of  the  money  is  paid  at  the  time  the 
money  is  returned  to  the  owner  or  the  lender,  it  is  usually  spoken  of  as 
interest.  If  the  compensation  for  the  use  of  the  money  is  deducted  at  a 
time  before  the  money  is  returned  to  the  owner  or  lender,  it  is  generally 
spoken  of  as  discount.  The  amount  of  compensation  allowed  for  the  use 
of  money  is  generally  estimated  at  a  certain  per  cent,  per  annum.  Thus 
if  A  loans  B  some  money  with  the  understanding  that  B  will  pay  interest 
at  6%  it  means  that  B  will  give  A  6/100  of  the  sum  borrowed  for  the  use 
of  that  sum  for  one  year.  If  he  retains  the  sum  for  a  longer  or  shorter 
period  than  one  year,  he  will  pay  a  proportionate  amount  for  its  use. 

What  is  the  interest  at  6%  on: 

1.  $54  for  1  year? 

2.  $110  for  1  year? 

3.  $54  for  1'^   years? 

4.  $54  for  V2   year? 

5.  $110  for  Vi   year? 


40 

Interest  for  Multiples  and  Alictuot  Parts  of  6  and  60. 

The  year  is  commonly  considered  as  360  days  for  business  purposes. 
60  days  is  what  part  of  a  year?    What  is  1/6  of  6/100? 

If  6/100  (6%)  of  the  sum  loaned  is  the  interest  for  one  year  (360 
days),  the  interest  for  60  days  (1/6  of  1  year)  is  what  part  of  the  sum 
loaned? 

How  do  you  find  1/100  of  any  sum?  The  interest  at  6%  for  60  days 
is  what  part  of  the  sum  loaned?  How  can  you  find  the  interest  on  any 
sum  of  money  for  60  days  at  6%  ? 

What  is  the  interest  at  6  per  cent,  on: 

6.  $54  for  60  days?     120  days?     30  days?     12  days?     10  days? 

7.  $110  for  60  days?    180  days?    20  days?    12  days?    15  days? 

8     $5267.50  for  60  days?     120  days?     10  days?     15  days?     12  dayaS 

6  is  what  part  of  360?     What  is  1/60  of  6/100?    If  6/100  of  the  sum 

loaned  is  the  interest  for  one  year,  the  interest  for  6  days  is  what  part  of 

the  sum  loaned?     How  many  places  are  pointed  off  to  find  the  interest 

for  6  days? 

Interest  for  Any  Number  of  Days. 

In  the  above  problems  you  found  the  interest  for  60  days  by  pointing 
off  two  places.  To  find  the  interest  for  the  required  number  of  days,  you 
multiplied  or  divided.  The  number  of  days  in  each  case  being  a  multiple 
or  aliquot  part  of  60,  the  operation  was  very  simple.  The  operation  in 
finding  the  interest  for  any  number  of  days  may  be  made  equally  simple 
by  dividing  the  time  up  into  aliquot  parts  or  multiples  of  6  or  60. 

Example:     Find  the  interest  on  $235  for  44  days  at  6%. 

44  days=7x6  days  plus  2  days. 
.235=interest  for  6  days. 
7 


1.645=interest  for  42  days  (7X6  days). 
.078=interest  for  2  days  (1/3  of  6  days). 


1.723=interest  for  44  days  (42  days  plus  2  days). 
Divide  the  following  periods  of  time  into  multiples  or  aliquot  parts 
of  6  or  60: 

9.     13  days,  23  days,  16  days,  43  days,  57  days. 

10.  7  days,  14  days,  27  days,  49  days,  93  days. 

11.  68  days,  55  days,  23  days,  17  days,  108  days. 
Find  the  interest  at  6%  on: 

12.  $272.50  for  13  days,  23  days,  16  days,  43  days,  57  days. 

13.  $316  for  7  days,  14  days,  49  days,  27  days,  93  days. 

14.  $2408.36  for  68  days,  55  days,  23  days,  17  days,  108  days. 

Time. 

When  negotiable  paper  reads  a  certain  number  of  years  or  months, 
the  time  is  computed  by  calendar  years  or  months.  Example:  A  note 
dated  Jan.  12,  at  three  months,  is  due  April  12.  When  negotiable  paper 
reads  a  certain  number  of  days,  the  exact  number  of  days  are  counted. 

Find  the  date  when  the  note  is  due,  and  the  time  (stated  in  days) 
for  the  payment  of  interest,  on  the  following: 


41 

15.  Note  dated  Jan.  3,  at  3  nios.,  paid  Mar.  20. 

16.  Note  dated  July  16,  on  demand,  paid  Sept.  4. 

17.  Note  dated  May  7,  at  60  days,  paid  July  10. 

18.  Note  dated  Feb.  6,  1907,  at  1  year,  paid  Feb.  6,  1908. 

19.  Note  dated  Aug.  20,  at  90  days,  paid  Dec.  4. 

20.  Note  dated  Feb.  28,  at  6  mos.,  paid  June  20. 

21.  Note  dated  Oct.  1,  at  60  days,  paid  Jan.  3. 

22.  Note  dated  Dec.  12,  at  90  days,  paid  Mar.  1. 

23.  Note  dated  Sept.  10,  at  3  mos.,  paid  Dec.  10. 

24.  Note  dated  Mar.  4,  at  10  days,  paid  Mar.  31. 

25.  Note  dated  Nov.  24,  at  6  mos.,  paid  Apr.  2. 

26.  Note  dated  May  30,  at  30  days,  paid  June  29. 

27.  Note  dated  Aug.  20,  at  1  mo.,  paid  Sept.  30. 

28.  Note  dated  Jan.  13,  at  60  days,  paid  Mar.  6. 

29.  Note  dated  Feb.  1,  at  90  days,  paid  May  10. 
Find  the  interest  on: 

30.  A  note  for  $500,  dated  Jan.  3,  at  3  mos.,  paid  Mar.  20,  at  6%. 

31.  A  note  for  $315.50,  dated  July  16,  on  demand,  paid  Sept.  4,  at  6%. 

32.  A  note  for  $425,  dated  May  7,  at  60  days,  paid  .July  10,  at  7%. 
(Add  1/6  of  interest  at  6%.     Why?) 

33.  A  note  for  $150,  dated  Feb.  6,  1907,  at  1  year,  paid  Feb.  6,  1908, 
at  5%.  (How  do  you  find  the  interest  at  5%  after  you  have  found  it  at 
6%?     Why?) 

34.  A  note  for  $2500,  dated  Aug.  20,  at  90  days,  paid  Dec.  4,  at  4^2%. 

Discount. 

Los  Angeles,  Cal.,  Mar.  3,  1907. 

Three  months  after  date  I  promise  to  pay  to 

Silas  Warner,  or  order $200.00 

Two  Hundred  no/100 Dollars 

for  value  received. 

JOHN  DOE. 

When  is  the  above  note  due? 

Silas  Warner  holds  the  above  note  until  April  2  at  which  time  he 
discounts  it  at  the  bank.  The  bank  will  advance  him  money  on  this  note. 
Silas  Warner  will  thus  be  using  the  bank's  money  from  April  2  until  the 
note  is  due,  ate  which  time  the  bank  will  receive  $200  from  John  Doe. 
This  being  the  case,  the  bank  should  receive  pay  for  the  use  of  its  money 
from  April  2  until  the  note  is  due  from  Silas  Warner.  This  is  done  by 
computing  interest  on  the  note  for  the  length  of  time  it  still  has  to  run 
and  deducting  this  from  $200,  the  bank  paying  Silas  Warner  the  proceeds. 
This  deduction  is  called  discount. 

If  the  rate  is  7%,  how  much  will  Silas  Warner  receive  on  the  above 
notef  (It  is  customary  in  banking  to  deduct  discount  for  the  exact 
number  of  days.) 


42 

What  are  the  proceeds  of  the  following  discounts: 


Face 

Date  of  Note 

Time 

Date  of  Discount 

Rate 

35. 

$300 

Feb.    12 

30  days 

Mar.    1 

6% 

36. 

$435 

Sept.  10 

45  days 

Oct.     7 

7% 

37. 

$210 

Dec.    21 

3  mos. 

Jan.   17 

6% 

38. 

$750 

May    30 

10  days 

June    2 

6% 

39. 

$250 

July    15 

1  mo. 

July  25 

7% 

Discount  on  Interest-Bearing  Paper — Eastern  and  Western  Practice. 

In  the  above  note  made  by  John  Doe,  there  is  no  promise  to  pay 
interest.  If  there  were  included  in  the  note  a  promise  to  pay  interest, 
the  note  would  be  worth  more  than  $200  when  it  comes  due,  and  the  bank 
would  receive,  when  it  is  paid,  $200  plus  the  interest,  thus  as  the  bank 
receives  more  than  $200  it  should  give  Silas  Warner  proportionately 
larger  proceeds.  This  being  the  case,  in  eastern  states,  the  discount  on 
interest-bearing  notes  is  figured  on  the  face  plus  the  interest. 

In  most  parts  of  California  and  some  other  western  states,  banks  in 
purchasing  interest-bearing  paper  allow  the  owner  the  face  plus  the 
interest  accrued  to  date  of  purchase.  By  this  plan  the  banks  receive  the 
interest  from  the  date  of  purchase  to  the  date  of  maturity.  As  the 
western  practice  for  discounting  interest-bearing  paper  involves  only  the 
figuring  of  interest  from  the  date  of  the  paper  to  date  of  discount,  no 
new  processes  are  involved.  However,  as  the  eastern  practice  figures 
discount  on  the  face  plus  the  interest  for  the  full  time,  the  following  solu- 
tion and  problems  are  given  for  practice. 

Suppose  the  above  note  bears  interest  at  6%,  then: 
$2.00=Interest  for  2  mos.  at  6%. 
1.00=Interest  for  1  mo.  at  6%. 


$3.00=Interest  for  3  mos.  at 
$200.00 
3.00 


$203.00.= What  note  is  worth  when  due. 
$2.03  =Interest  for  60  days  at  6%. 
.067=Interest  for  2  days  at  6%. 


$2.097=Interest  for  62  days  at  6%. 
.34&=Interest  for  62  days  at  1%. 


$2.446=Interest  for  62  days  at  7%. 
$203.00 

2.446=Diseount  for  62  days  at  7%. 


$200.554.=-Proeeeds  due  Silas  Warner. 


43 

Find  the  proceeds  in  the  following  problems: 


Face 

Date  of  Note 

Time 

Rate  of  Int. 

Date  Dis.  Rate  Dis. 

40,       $375 

Feb.    28,   '07 

3  mos. 

6% 

April  2                7% 

41.     $1250 

Dec.    12,   '07 

30  days 

7% 

Dec.  27               7% 

42.       $425 

July     6,   '07 

10  days 

6% 

July    7               7% 

43.     $2000 

Sept.  20,   '06 

6  mos. 

67o 

Jan.  23,  '07       6% 

44.     $1850 

Mar.     1,   '07 

60  days 

5% 

Mar.  29,  '  07       6% 

Leaving 

out  the  interest, 

find  the  proceeds  in 

each  of  the  last  five 

problems. 

PART  II. 
Part  II  may  be  used  at  this  point  or  it  may  be  postponed 
until  the  Hardware  Business  is  completed. 

HARDWARE  BUSINESS. 

April  1.  R.  C.  Cowan  has  purchased  the  hardware  busi- 
ness formerly  conducted  by  M.  L.  Sprague  &  Co.,  at  Eighth  and 
Santee  streets.  A  careful  inventory  of  the  stock  and  equip- 
ment shows  the  following  facts:  Merchandise  on  hand  $3210.15, 
furniture  and  fixtures  $706,  horses  and  wagons  $525,  and  un- 
used wrapping  paper,  twine,  etc.,  $36.50.  Mr.  Cowan  also 
places  $500  cash  in  the  business.  Using  journal  and  ledger, 
open  books  for  the  business.  (Charge  in  the  journal  the  proper 
accounts  for  the  property  listed  above  and  credit  the  proper 
account  for  its  production.  Think  out  carefully  your  reasons 
for  these  debits  and  credits.) 

Mr.  Cowan  has  engaged  the  following  help:  Student  as 
bookkeeper  at  $12  per  week;  Charles  Springer  as  clerk  at  $7 
per  week  and  2%  commission  on  his  sales,  and  Marion  Salter 
to  drive  the  wagon  and  take  care  of  the  horses  at  $10  per  week. 
(So  far,  no  value  has  been  received  or  given  by  the  business, 
no  work  performed  or  wages  paid,  hence  no  accounts  are  in- 
volved. A  memorandum  of  such  agreements  should,  however, 
be  written  in  the  journal.) 

2.  Paid  C.  O.  Marvin  $100  for  rent  of  store  for  month  of 
April. 

Bought  of  Eagle  Feed  and  Fuel  Co.  an  invoice  of  hay  and 
grain  for  horse  feed,  $16.25,  on  account.  (This  being  material 
that  is  used  up  in  the  business  it  may  be  classified  as  Expense. 
Some  prefer  to  charge  such  items  to  the  horse  and  wagon  ac- 
count so  that  this  account  will  show  the  entire  amount  expend- 
ed upon  horses  and  wagons.  In  large  concerns  it  is  not  unus- 
ual to  have  a  separate  account  with  feed,  repairs,  shoeing,  etc. 


44 

You  may  charge  the  above  and  all  such  items  to  Horse  and 
Wagon  account.) 

Paid  Seeley  &  Patton  for  rent  of  barn  for  April,  $12. 

Cash  sales  for  the  day  as  shown  by  the  cash  register, 
$25.50. 

3.  Bought  of  the  Moon  Hardware  Co.,  Inc.,  an  invoice  of 
hardware  amounting  to  $136.40,   on  account. 

Sold  V.  E.  Craig,  246  W.  Fortieth  St.,  on  account,  1  0.  K. 
Washer,  $7.95 ;  1  Acme  Wringer,  $2.35 ;  10  doz.  Clothes  Pins  at 
6  cts.  (Be  sure  and  note  all  customers*  addresses  in  the  expla- 
natory column  of  the  journal  so  that  the  addresses  may  be 
placed  in  the  ledger  when  accounts  are  opened.  Each  item 
of  merchandise  should  occupy  a  separate  line  in  the  explana- 
tion.) 

Sales  per  cash  register  for  day,  $37.80. 

4.  Sold  the  Acme  Building  Co.,  410  Stevens  Block,  on 
account,  Frost  Job,  20  lbs.  60d  Nails  at  3  cts. ;  25  lbs.  20d  Nails 
at  3  cts. ;  1  keg  lOd  Nails,  $2.20 ;  15  lbs.  8d  Nails  at  31/2  cts. ;  1 
keg  8d  Finishing  Nails,  $2.50 ;  50  lbs.  6d  Finishing  Nails  at  31/2 
cts.  (It  is  customary  for  builders  and  contractors  to  order 
goods  delivered  at  certain  jobs,  designating  the  job  by  the  own- 
er's name  or  street  location.  For  example,  Smith  Job,  Eighth 
St.  Job,  etc.  For  convenience,  carry  these  job  names  into  the 
explanation  columns  of  the  ledger  when  posting.  This  plan 
makes  it  possible  to  indicate  on  monthly  statements  the  job 
names,  thus  aiding  the  customer  in  cheeking  up  and  keeping 
track  of  the  different  jobs.  Also,  some  customers  pay  their 
bills  according  to  the  jobs,  rather  than  paying  their  account  as 
a  whole.) 

Bought  of  Lang  &  Keys  Co.,  on  our  note  at  30  days,  with 
interest  at  6%,  an  invoice  of  merchandise  amounting  to  $342. 
(What  account  costs  value?  What  account  supplies  value? 
No  entry  is  made  for  interest  until  the  time  of  payment.  How- 
ever, the  agreement  to  pay  interest  should  always  be  noted  in 
the  explanation  of  the  entry.) 

Cash  sales  for  day,  $22.40. 


45 

5.  Sold  V.  E.  Craig,  on  account,  1  set  Sadirons,  $1.25 ;  1 
Folding  Ironing  Board,  $2.10;  1  No.  3  Universal  Meat  Chopper, 
$4.50. 

Sold  M.  A.  Ellsworth,  12.34  W.  20th  St.,  1  Jewel  Gas  Range, 
$32.50.     Received  his  10-day  note,  without  interest,  for  same. 
Cash  sales  for  day,  $31.10. 

6.  Sold  Wm.  Erickson,  1310  S.  Flower  St.,  for  his  note  at 
60  days,  with  interest  at  7%,  1  Garland  Range  No.  9,  $41.25;  1 
Wonder  Washer,  $8 ;  1  set  Sadirons,  $1.45 ;  2  No.  3  Galvanized 
Iron  Tubs  at  75  cts. ;  3  Granite  Stew  Pans,  6  qt.,  at  49  cts. 

Sold  Fry  &  Fellows  Co.,  310  W.  Ave.  63,  on  account,  Smith- 
wick  Job,  Cor.  Mission  &  Ave.  52,  1  doz.  Butts,  3  in.  No.  7226, 
at  $1.25  per  doz. ;  2  doz.  No.  687  Sash  Lifts  at  47  cts. ;  6  Cham- 
pion Mortise  Door  Locks  No.  728,  at  $1.43 ;  1  doz.  Elbow  Catch 
No.  62,  25  cts. ;  1  doz.  No.  739  Drawer  Pulls,  30  cts. ;  4  doz.  No. 
777  Sash  Pulleys  at  $1.15;  1  Special  Front  Door  Lock  and 
Trim,  $15.60. 

Paid  telephone  rent  for  month  of  April,  $5.50. 

Cash  sales  for  day,  $42.05. 

Paid  the  help  as  per  agreement  of  the  first.  Mr.  Spring- 
er's commission  for  week,  $4.15. 

Present  your  work  for  inspection. 

Post,  allowing  one  page  each  for  Merchandise  and  Cash, 
one-half  page  for  Expense  and  one-third  page  each  for  other 
accounts,  Do  not  forget  to  place  addresses  in  ledger,  also  jour- 
nal pages  in  the  ledger  and  vice  versa. 

Have  your  work  inspected. 

8.  Paid  for  stationery,  $2.50. 
Bought  postage  stamps,  $1.00. 

Bought  of  Welch  &  Sutton,  Pittsburg,  an  invoice  of  hard- 
ware amounting  to  $675.00,  on  accoimt. 

Sold  J.  C.  Farnum,  1462  Santee  St.,  on  account,  50  ft.  Gar- 
den Hose  at  21  cts. ;  1  Spade,  $1.10 ;  1  Hoe  75  cts. ;  1  Rake,  90  cts. 

9.  Sold  the  Acme  Building  Co.,  Sturdevant  Job,  2  kegs  20d 
Nails  at  .$2.15 ;  3  kegs  lOd  Nails  at  $2.20 ;  1  keg  6d  Finishing 
Nails  at  $2.60 ;  2  kegs  8d  Finishing  Nails  at  $2.50.  Frost  Job,  2 
gro.  11/2  in-  Flat  Head  Bright  Screws  at  22  cts. ;  1  keg  2d  Lath 
Nails,  $3.15.     (To  keep  track  of  the  jobs,  enter  each  job  sepa- 


46 

rately  to  the  debit  of  the  Acme  Bldg.  Co.,  crediting  merchandise 
for  the  total.) 

Paid  for  having  horses  shod,  $2.50. 

Paid  for  lettering  of  sign  on  windows  of  store,  $4.25. 

Cash  sales  for  day,  $33.75. 

10.  Received  of  V.  E.  Craig  cash  in  full  of  account. 
Sold  J.  C.  Farnum,  1462  Santee  St.,  on  account,  150  ft.  of  4 

ft.  Poultry  Netting,  $2.80;  1  lb.  Staples,  5  cts. 
Cash  sales  for  day,  $39.70. 

11.  Sold  M.  L.  Harwood,  874  Santee  St.,  on  account,  1 
Dalton,  20  in..  Upright  Drill,  $87.50. 

Paid  Moon  Hardware  Co.,  Inc.,  in  full  for  invoice  of  the 
3d  inst. 

Cash  sales  for  day,  $37.16. 

12.  Received  of  Fry  &  Fellows  Co.  their  note  at  10  days 
in  full  for  sale  of  the  6th, 

Received  of  J.  C.  Farnum,  $5  on  account. 
Cash  sales  for  day,  $43.90. 

13.  Sold  V.  E.  Craig,  246  W.  40  St.,  on  account,  1  Hoe,  75 
cts.;  1  Rake,  90  cts.;  25  ft.  %  in.  Excelsior  Hose  at  18  cts. 

Cash  sales  for  day,  $46.30. 

Paid  help  for  week.    Mr.  Springer's  commission,  $5.36. 

Mr.  Cowan  has  made  arrangements  with  Mr.  M.  A.  Morse 
to  hereafter  carry  on  the  business  as  a  partnership.  A  com- 
plete line  of  agricultural  implements  will  be  added  to  the  pres- 
ent stock.  Mr.  Morse  is  to  invest  an  amount  of  cash  equal  to 
Mr.  Cowan's  present  worth.  The  firm  will  be  known  as  the 
Morse-Cowan  Hardware  Co. 

Present  your  journalizing  for  inspection. 

Post  and  take  a  trial  balance. 

Have  your  work  inspected. 

15.  In  order  to  ascertain  the  amount  of  Mr.  Morse's  in- 
vestment it  is  necessary  to  make  out  financial  statements  of  the 
business.  Mr.  Cowan  and  Mr.  Morse  have  agreed  upon  the 
following  inventories:  Merchandise  on  hand,  $3910.40;  Fur. 
&  Fix.,  $692.30;  Horse  &  Wagon,  $546.20;  Rent  unused,  $50; 
Telephone  unused  part  of  month,  $2.75. 


47 

Make  out  financial  statements  and  present  them  for  in- 
spection. 

Close  yonr  ledger  and  present  for  inspection. 

Received  of  Mr.  Morse  the  amount  of  his  investment  in 
cash.  (To  show  at  all  times  the  investment  each  partner  has  in 
the  business,  it  is  necessary  to  keep  a  separate  account  with 
each.) 

Paid  for  night  letter  ordering  a  carload  of  implements, 
$2.10. 

Received  cash  of  M.  A.  Ellsworth  in  full  for  his  note  of 
the  5th  inst. 

Cash  sales  for  day,  $49.60. 

16.  Sold  M.  L.  Harwood,  874  Santee  St.,  1  Reliance  Gas 
Engine  No.  36,  $185.  Received  in  payment  his  note  at  60  days 
with  interest  at  6%. 

Paid  our  note  of  the  4th  inst.,  in  favor  of  Lang  &  Keys  Co., 
and  interest  to  date.  (Two  things  are  paid  in  this  transaction, 
Bills  Payable  and  Interest.  Two  accounts  cost  value,  hence 
we  must  have  two  debit  items  in  the  entry.  Only  one  account 
supplies  value.  Remember  that  Bills  Receivable  and  Bills 
Payable  are  always  entered  at  their  face  value.) 
'  Cash  sales  for  day,  $50.70. 

17.  Sold  V.  E.  Craig,  on  account,  1  Penn.  Lawn  Mower, 
$9.25. 

Received  of  Lang  &  Keys  Co.  an  invoice  of  implements  and 
machinery  amounting  to  $3454.  Gave  in  payment  our  note  at 
60  days,  with  interest  at  6%,  for  $2000,  cash  for  balance. 

Cash  sales,  $54.05. 

18.  Paid  cash  for  an  invoice  of  machinery  amounting  to 

$3785.10. 

Discounted  at  1%  Wm.  Erickson's  note  of  the  6th  inst.,  re- 
ceiving cash  for  the  proceeds.  (In  this  transaction,  what  two 
accounts  supply  value?    What  two  accounts  cost  value?) 

Cash  sales,  $69.30. 

19.  Paid  for  having  new  sign  placed  on  windows,  $5.60. 
Paid  for  new  desk  for  Mr.  Morse,  $80. 

Paid  Eagle  Fuel  &  Feed  Co.  in  full  of  account. 
Paid  for  new  stationery,  $6.25. 
Cash  sales,  $48.90. 


48 

Sold  Hanson  &  Gross,  Fairfield,  1  Independent  Threshing 
Outfit,  $2280.  Received  in  payment,  cash  $500,  and  their  note 
at  90  days  with  interest  at  6%  for  the  balance. 

20.  Paid  wages  for  week.  Mr.  Springer's  commission, 
$9.23. 

Cash  sales,  $74.75. 

Present  your  journal  for  inspection. 

Post. 

22.  Bought  of  Eagle  Fuel  &  Feed  Co.,  on  account,  an  in- 
voice of  hay  and  grain,  $18.90. 

Received  cash  of  Acme  Building  Co.  in  full  for  items  de- 
livered on  Frost  Job. 

Sold  Fry  &  Fellows,  310  W.  Ave  63,  50  lbs.  3^  in.  Rope  at 
18  ets.;  2  Pulleys,  6  in.,  and  Hangers,  $3.10. 

Cash  sales,  $64.95. 

23.  Paid  for  repairs  on  wagon,  $12.25. 

Received  cash  of  Fry  &  Fellows  Co.  in  full  for  their  note 
of  the  12th. 

Discounted  at  bank  at  7%  M.  L.  Harwood's  note  of  the 
16th  instant,  receiving  cash  for  the  proceeds. 

Mr.  Morse  has  taken  from  the  stock  for  his  own  use  1  Penn. 
Lawn  Mower,  $9.15,  and  has  also  withdrawn  for  his  own  use 
$320  in  cash. 

Cash  sales,  $69.17. 

24.  Sold  Hanson  &  Gross.  Fairfield,  1  Truck,  3-ton  Reli- 
ance.    Received  in  payment  their  30-day  note  for  $225. 

Rented  store  room  next  door  for  one  year  from  May  1st  at 
$125  per  month.  Gave  our  10-day  note  to  C.  0.  Marvin  for 
May  rent. 

Gave  A.  L.  Glick  our  note  at  60  days,  with  interest  at  7%, 
for  bracing  floors  and  cutting  arches  through  to  new  store 
room,  $210.50. 

Cash  sales,  $103.75. 

25.  Mr.  Cowan  was  killed  in  a  railway  accident  this  morn- 
ing. The  death  of  a  partner  causes  the  dissolution  of  a  part- 
nership, hence  the  store  is  closed  and  business  discontinued 
for  the  present.     In  order  to  make  the  proper  adjustment,  it 


49 

will  be  necessary  to  make  financial  statements  and  close  the 
books.     Present  your  journal  for  inspection. 

Post,  take  a  trial  balance  and  present  your  work  for  in- 
spection. 

29.  H.  L.  Keith  and  C.  0.  Sprague,  who  have  been  author- 
ized to  represent  Mr.  Cowan's  heirs,  and  Mr.  Morse  have  agreed 
upon  the  following  inventories :  Merchandise,  $8316.20.  Furni- 
ture &  Fixtures,  $748.50.  Horse  and  Wagon,  $550.  Feed  on 
hand,  $9.10,  Unused  rent  on  new  store  room,  $125.  Repairs  on 
new  store  room,  $200.  Interest  accrued  on  Bills  Payable  and 
Bills  Receivable  to  be  determined  by  the  bookkeeper.  Wages 
due  help  for  week,  $34.90.  Unused  stationery,  wrapping  paper, 
twine,  etc.,  $8.95. 

Figure  carefully  the  interest  on  each  interest-bearing  note 
from  the  time  it  is  drawn  to  the  present  date.  Use  the  differ- 
ence between  the  interest  owed  by  the  business  and  that  owed 
to  the  business  as  your  inventory  in  interest  account.  Make 
financial  statements  and  submit  them  for  inspection. 

Close  the  ledger  and  present  your  work  for  inspection. 


PART  II. 

If  not  used  preceding  the  Hardware  Business,  the  pupil 
should  secure  Part  II  at  this  point  and  thoroughly  master  it 
before  taking  up  the  next  chapter.  The  Cash  Book  in  the 
following  chapter  should  be  mastered  after  Part  II  and  be- 
fore taking  up  Part  III. 


THE  CASH  BOOK. 

Thus  far  in  your  bookkeeping  work,  when  cash  was  re- 
ceived, you  have  made  a  journal  entry  debiting  cash  and  cred- 
iting some  other  account.  When  cash  was  paid  out,  you  have 
credited  cash  and  debited  some  other  account  in  the  journal. 
When  these  items  were  all  posted,  all  cash  received  appeared 
on  the  debit  side  of  the  cash  account,  and  all  cash  paid  out  ap- 


50 


/9- 


J 


f^^^ 
^3^^,^^ 


'-—--''^i.^^ 


£^^-a,-'9''Z^C^ 


:Za 


.<:.;} 


PT 


-^ 


39t-^ 


peared  on  the  credit  side  of  the  cash  account.  The  difference 
between  the  total  debits  and  the  total  credits  showed  the  cash 
on  hand.  To  increase  the  debit  of  the  account  increases  the 
cash  on  hand.  To  increase  the  credit  side  of  the  account  de- 
creases the  cash  on  hand. 

You  will  keep  a  cash  book  instead  of  a  cash  account  in 
the  ledger  in  the  following  transactions.  The  cash  book  is  your 
cash  account.  Take  a  sheet  of  journal  paper  and  rule  it  as 
shown  in  the  illustrative  cash  book.  Be  sure  to  have  two  col- 
umns at  the  left  of  each  page,  one  for  the  date  and  one  for 
the  ledger  pages.  Write  the  word  "Cash"  at  the  top  of  each 
page.  On  the  left-hand  page,  or  debit  side,  enter  all  cash  deb- 
its or  cash  received.  When  cash  is  received  and  debited,  some 
account  which  produces  the  cash  is  credited.  Write  the  name 
of  the  account  to  be  credited  in  the  wide  column  of  the  left- 
hand  page,  on  the  same  line  with  the  amount  and  date,  and 
follow  the  account  name,  on  the  same  line,  with  a  brief  expla- 
nation of  the  transaction.  On  the  right-hand  page,  or  credit 
side,  enter  all  cash  credits  or  cash  paid  out.  When  cash  is 
paid  out  and  credited,  write  the  name  of  the  account  to  be 
debited  in  the  wide  column  of  the  right-hand  page,  on  the  same 
line  with  the  amount  and  date,  and  follow  it  with  a  brief  ex- 
planation of  the  transaction.     By  this  plan  of  entering  trans- 


51 


^a 


s 


.^■ei^. 


^^''hr/nred  ink 


^^- 


.?/.^-?'' 


v:? 


/U^^^ 


K-^ 


/-i"? 


^^ 


^ 


.2^ 


actions  involving  cash,  the  word  cash  does  not  have  to  be  writ- 
ten and  the  amount  is  written  but  once,  thus  saving  much  time 
and  labor. 

For  example,  the  first  entry  on  the  debit  side  of  the  illus- 
trative cash  book,  is  the  same  as  Cash,  Dr.,  $2000,  and  J.  M. 
Doane,  Cr.,  $2000,  the  second,  Cash,  Dr.,  $36.40,  and  Merchan- 
dise, Cr.,  $36.40.  On  the  credit  side,  the  first  entry  is  the  same 
as  Expense,  Dr.,  $65,  and  Cash,  Cr.,  $65,  the  second,  Furniture 
and  Fixtures,  Dr.,  $145,  and  Cash,  Cr.,  $145. 

Note:  When  writing  the  names  of  the  accounts  and  explanations  in  the 
Cash  Book,  keep  the  account  names  to  the  left  of  the  wide  column  and  the 
explanations  to  the  right  with  an  even,  vertical  margin  for  each  part.  (See 
Cash  Book  illustrations.) 

Make  the  following  entries  in  accordance  with  your  ans- 
wers to  the  questions :  "What  account  receives  or  cost  value?" 
and  "What  account  produces  or  supplies  value?" 

May  1.  J.  Walter  Lang  commenced  business  investing 
$2000  in  cash. 

Paid  one  month's  store  rent  in  advance,  $50. 

2.  Received  invoice  of  Mdse.  from  J.  C.  Brice  &  Co.,  paid 
for  same  in  cash,  $410. 

Bought  counter,  shelves,  showcases,  etc.,  paying  for  same 
in  cash,  $232.50.  (Open  a  Furniture  and  Fixture  account  for 
items  of  this  kind.) 

Paid  for  books,  stationery,  etc.,  $13.60. 


52 

3.  Deposited  cash  in  The  Second  National  Bank,  $1100. 
This  money  does  not  leave  the  business.    Merely  the  place 

of  keeping  it,  as  a  matter  of  convenience  and  safety,  is  changed. 
No  entry  is  required. 

Sold  merchandise  for  cash,  $18.35. 

Received  of  J.  M.  Snell  $38.70  in  cash  for  Mdse. 

Bought  for  cash  an  invoice  of  Mdse.,  dated  May  2,  amount- 
ing to  $317.20. 

4.  Received  cash  for  Mdse.  sales,  $78.64. 
Paid  clerks'  salaries  for  week,  $18.75. 

Bought  for  cash  a  horse,  wagon  and  harness  for  use  in  de- 
livering Mdse.,  $475.     (Debit  horse  and  wagon  account.) 

Received  for  invoice  of  Mdse.  sold  to  Charles  Brokaw, 
$86.90  in  cash. 

Received  for  cash  sales  of  Mdse.,  $88.25. 

Foot  the  debit  and  credit  sides  of  your  cash  book  in  pencil 
and  find  the  balance  of  cash  on  hand.  Refer  to  the  illustrative 
cash  book  and  close  your  cash  book  in  like  manner.  Caution : 
Be  sure  to  get  your  ruling  on  the  same  horizontal,  blue  line  of 
both  pages,  and  correct  in  other  details. 

Present  your  work  to  your  teacher  for  inspection. 

May  6.  Mr.  Lang  makes  an  additional  investment  of  $100 
in  cash. 

Received  of  James  Marsh  for  Mdse.,  $38.65. 

Bought  of  Upton  &  Walsh  an  invoice  of  Mdse.  amounting 
to  $345,  and  paid  for  same  by  check  on  The  Second  National 
Bank. 

7.  Mr.  Lang  decides  to  largely  increase  his  stock  of  Mdse. 
and  in  order  to  do  so  he  will  need  more  ready  cash.  He  has  ar- 
ranged with  The  Second  National  Bank  for  a  loan  of  $1000. 
This  amount  has  been  placed  to  the  credit  of  his  account  at  the 
bank  and  he  has  given  his  thirty-day  note,  bearing  interest  at 
7%,  for  the  same.  (No  entry  is  made  for  interest  until  it  is 
actually  paid  or  received. 

Received  for  sundry  cash  sales  during  the  day,  $94.52. 

Mr.  Lang  has  placed  an  order  with  the  Kuhn-Snyder  Co., 


53 

of  San  Francisco,  for  $950  worth  of  Mdse.  This  Mdse.  is  to 
be  shipped  at  once  and  will  probably  be  received  in  about  a 
week.  (The  entry  for  this  purchase  will  be  made  when  the 
goods  are  received.    No  entry  is  necessary  in  placing  an  order.) 

8.  Mr.  Marsh  returns  a  part  of  the  Mdse.  sold  him  on  the 
sixth  as  it  is  not  satisfactory.    We  refund  $12.17  for  the  same. 

Paid  for  advertisement  in  the  Evening  News,  $24. 
Sold  ]\Idse.  amounting  to  $76.55  for  cash. 

9.  Received  for  sundry  cash  sales  of  Mdse.,  $94.43. 

10.  Bought  for  cash,  of  R.  C.  Boynton,  Mdse.  amounting 
to  $31.50. 

Cash  sales,  $87.24. 

10.  Mr.  Lang  has  decided  that  it  would  be  advantageous 
to  allow  credit  to  certain  customers.  From  this  time  on,  sales 
on  account  will  be  entered  in  the  Journal.  All  and  only  such 
entries  as  affect  the  cash  account  are  placed  in  the  cash  book. 

Sold  W.  J.  Amos  Mdse.,  on  account,  amounting  to  $22.75. 
Sold  Mrs.  Herbert  Sidney,  on  account,  Mdse.  amounting 
to  $125. 

Bought  of  Upton  &  Walsh,  on  account,  Mdse.  $125. 

11.  Bought  of  the  Keystone  Produce  Co.,  on  account,  an 
invoice  of  vegetables  amounting  to  $102. 

Sold  J.  C.  Donovan  Mdse.  amounting  to  $50,  receiving  in 
payment  his  five-day  note,  without  interest. 

Traded  horse  and  wagon  with  C.  E.  Stoner,  receiving  as  a 
bonus  his  10-day  note,  in  our  favor,  for  $125,  bearing  interest  at 
6%.  Think  this  entry  out  carefully.  What  account  supplied 
value  ?  What  accounts  cost  or  receive  value  ?  Make  your  entry 
show  these  facts. 

Sold  Wallace  &  Son,  for  cash,  Mdse.  amounting  to  $125.60. 

Cash  sales  for  day,  $101.73. 

Paid  clerks'  salaries  for  week,  $27.50. 

Paid  stable  bill  for  the  keeping  of  the  horse  and  wagon 
for  week,  $5.25. 

Mr.  Lang  withdrew  $15  in  cash  for  private  use. 

Close  your  cash  book  in  the  same  manner  as  on  the  4th 
and  present  your  work  for  inspection. 


54 

In  the  entries  you  have  been  making,  when  cash  was  debit- 
ed, you  wrote  the  name  of  the  account  to  be  credited  on  the 
left-hand  side  of  the  cash  book  on  the  same  line  with  the 
amount,  date,  etc.  Your  posting  to  the  Cash  account  is  already 
done  as  the  Cash  Book  is  your  Cash  account.  It  is  now  neces- 
sary, in  order  to  complete  the  other  accounts,  to  open  in  the 
ledger  such  accounts  as  are  named  in  the  explanation  columns 
of  the  Cash  book.  CREDIT  the  accounts  named  on  the  left-hand 
side  of  the  Cash  Book.  As  cash  account  is  already  debited, 
posting  to  the  credit  of  these  accounts  will  give  the  balanc- 
ing entries.  In  like  manner,  post  to  the  debit  side  of  the  ac- 
counts named  on  the  right-hand  side  of  the  Cash  Book.  As 
Cash  account  is  already  credited  this  will  complete  the  balanc- 
ing entries  for  these  transactions.  Do  not  forget  to  place 
ledger  pages  in  the  cash  book  and  vice  versa. 

Take  a  trial  balance  after  the  posting  is  completed.  Re- 
member your  Cash  Book  is  your  Cash  account,  and  as  it  is  nec- 
essary to  include  all  accounts  that  do  not  balance  in  your  trial 
balance,  it  is  necessary  to  include  the  balance  of  the  Cash  Book 
whenever  taking  a  trial  balance. 

May  13.  Received  cash  of  W.  J.  Amos  to  apply  on  ac- 
count, $12. 

Part  of  the  Mdse.  bought  of  R.  C.  Boynton  on  the  tenth  is 
unsalable.  We  return  the  damaged  portion  and  receive  a  cash 
refund  of  $6.25. 

Received  of  Mrs.  Herbert  Sidney,  cash  to  apply  on  ac- 
count, $15. 

Sundry  cash  sales  for  day,  $72.54. 

14.  Paid  Upton  &  Walsh  cash  to  apply  on  account,  $50. 
Paid  the  Keystone  Produce  Co.,  to  apply  on  account,  $75. 
Bought  of  C.  A.  Springer  one  load  of  potatoes,  paying  for 

same  in  cash,  $32.50. 

Cash  sales  for  day,  $93.51. 

15.  The  merchandise,  ordered  of  the  Kuhn-Snyder  Co.  on 
the  seventh  amounting  to  $950,  has  been  received  and  checked. 
(When  buying,  no  entry  is  made  until  the  merchandise  is  ac- 


55 

tually  received  and  checked  up.     Treat  this  transaction  as  a 
purchase  on  account  for  the  full  amount.) 

Mr.  Lang  has  drawn  a  cheek  on  The  Second  National  Bank 
for  $501.25,  with  which  he  will  purchase  a  draft  of  $500,  pay- 
ing $1.25  exchange,  and  remit  the  draft  to  the  Kuhn-Snyder  Co. 
to  apply  on  account.  (The  cost  of  making  this  remittance,  or 
the  exchange  on  the  draft,  is  a  part  of  the  expense  of  carrying 
on  the  business.  Treat  the  remittance  as  a  payment  on  ac- 
count.) 

Mr.  Lang  has  loaned  Jas.  Marsh,  on  his  promissory  note, 
$100,  date  of  note  May  15,  due  30  days  after  date,  without  in- 
terest. 

Mr.  Lang  has  taken  the  above  note  to  The  Second  National 
Bank  and  had  it  discounted  at  7%,  the  proceeds  placed  to  his 
credit.  (Two  entries  are  necessary,  one  for  loaning  the  money 
and  the  other  for  discounting  the  note.) 

Cash  sales  for  day,  $106.34. 

16.  Mr.  Lang  withdrew  cash  for  private  use,  $25. 

J.  C.  Donovan  pays  his  note  of  the  11th  inst.,  in  our  favor, 
face  of  note  $50. 

Cash  sales,  $99.65. 

17.  Paid  for  having  horse  shod,  $2. 
Paid  Walter  Jenks  for  Mdse.,  $15.35. 
Sundry  cash  sales,  $104.35. 

18.  Paid  stable  bill  for  week,  $5.25. 
Cash  sales,  $114.70. 

Paid  clerks'  salaries  for  week,  $27.50, 

Close  your  cash  book  and  present  your  work  for  inspection. 

May  20.  Mr.  Lang  loans  W.  J.  Amos,  a  customer,  $5  on 
account  for  a  few  days. 

Remitted  the  Kuhn-Snyder  Co.  a  San  Francisco  bank 
draft  of  $450,  to  apply  on  account.    Exchange  on  draft,  $1.25. 

Cash  sales,  $69.30. 

21.  As  we  now  have  sufficient  cash  on  hand,  Mr.  Lang  has 
paid  his  note  of  the  seventh  in  favor  of  The  Second  National 
Bank,  with  interest  for  the  time  it  has  run.  (Make  two  entries, 
one  for  the  note,  the  other  for  the  interest.) 


56 

Received  of  Mrs.  Herbert  Sidney,  to  apply  on  account, 
$12.50. 

Paid  Upton  &  Walsh,  on  account,  $50. 
Cash  sales  for  day,  $84.96. 

22.  Mr.  Lang  has  discovered  that  one  dollar  of  the  money 
received  yesterday  is  a  counterfeit.    (Charge  to  Loss  and  Gain.) 

Mr.  Lang  withdrew  for  private  use,  $10. 
Cash  sales,  $17.29. 

23.  Received  cash  of  C.  E.  Stoner  for  his  note,  in  our 
favor,  due  today,  face  of  note  $125,  interest  on  same,  25  cts. 

Received  cash  of  Mrs.  Herbert  Sidney  in  full  of  account. 
Paid  the  balance  due  the  Keystone  Produce  Co.  on  account. 
Cash  sales  for  day,  $92.10. 

24.  Loaned  Milton  Brown  on  his  90-day  note,  with  inter- 
est at  6%,  $50. 

Mr.  Lang  discounts  the  above  note  at  The  Second  National 
Bank  at  7%,  receiving  credit  for  the  proceeds. 

25.  Paid  the  following  expenses  for  the  week:  Stable 
bill,  $5.25 ;  salaries,  $27.50. 

Cash  sales,  $111.16. 

Close  your  cash  book  and  present  your  work  for  inspec- 
tion. 

Read  again  the  explanation  of  the  posting  given  under 
May  11.  Post  your  work  and  take  a  trial  balance.  The  inven- 
tories are  as  follows:  Merchandise  $850,  Furniture  and  Fix- 
tures $200,  Horses  and  Wagon  $275.  Make  out  financial 
statements  and  close  the  ledger. 

Present  your  work  for  inspection. 

PART  III. 

The  pupil  is  ready  to  take  up  the  work  of  Part  IH  at 
this  point.  Commission  and  the  six  reviews  may  be  used  at 
any  time  the  teacher  deems  best.  They  are  supplied  for  addi- 
tional drill  and  may  be  entirely  omitted. 

COMMISSION. 

Certain  localities  or  communities  generally  produce  some 
few  staple  articles  of  commerce  in  such  abundance  as  to  make 
it  impossible  to  use  all  of  the  supply  in  that  immediate  vicinity. 
Thus  a  locality  will  grow  more  wheat  than  it  can  use;  another 


57 

locality  will  produce  more  butter  than  it  needs;  another  more 
fruit,  etc.  Supplies  of  all  kinds  are  generally  in  demand  in  the 
cities,  so  we  find  in  the  cities  men  and  firms  who  make  a  busi- 
ness of  finding  buyers  for  the  men  who  have  any  surplus  pro- 
duce, provisions,  live  stock,  etc.,  to  dispose  of;  for  this  service 
these  men  or  firms  generally  charge  a  certain  per  cent,  of  the 
gross  selling  price,  and  this  charge  is  called  commission,  while 
those  engaged  in  this  work  are  said  to  be  in  the  commission 
business.  Men  or  firms  in  the  commission  business  usually 
maintain  offices  and  warehouses  or  stores  at  which  they  receive 
the  commodities  that  they  sell  for  others.  Commodities  thus 
received  to  be  sold  for  the  owners  are  known  as  consignments. 

As  the  commission  merchant  must  make  returns  to  the 
ow^ner  for  each  consignment  received,  he  opens  a  separate  ac- 
count for  each  consignment  received,  numbering  it,  and  to  aid 
in  distinguishing  the  consignments  from  each  other,  generally 
adds  the  name  of  the  consignor  as  a  part  of  the  account  title. 
Example:  Consignment  No.  12,  Chas.  Howe.  Remember  these 
consignment  accounts  are  entirely  separate  from  any  personal 
account  you  may  have  with  the  same  party.  Debit  each  sep- 
arate consignment  account  for  all  costs  (freight,  drayage,  in- 
surance, commission,  net  proceeds,  etc.)  Net  proceeds  is  the 
amount  due  the  owner  after  all  charges  have  been  deducted. 
Credit  each  separate  consignment  account  for  all  it  produces 
(receipts  from  sale  of  the  consignment). 

It  is  a  common  practice  for  commission  men  to  buy  com- 
modities and  ship  them  to  other  localities  to  be  sold  for  them 
on  commission.  Merchandise  shipped  by  the  owner  to  another 
to  be  sold  on  commission  is  known  to  the  owner  as  a  shipment. 

When  property  is  shipped  to  be  sold  on  commission,  a  sep- 
arate account  with  each  shipment  is  opened  on  the  books  of 
the  owner  to  represent  the  separate  lots  of  property  that  have 
gone  out  of  his  possession  but  not  his  ownership.  Of  course, 
the  owner  wants  to  know  whether  he  is  losing  or  gaining  on 
each  shipment  and  how  much,  so  it  is  necessary  to  have  a  sep- 
arate account  with  each  shipment  made.     To  help  distinguish 


58 

the  shipments,  generally  the  name  of  the  party  to  whom  ship- 
ped and  the  number  of  the  shipment  are  added  to  the  account 
title.  Example :  Shipment  No.  5,  W.  E.  Smith  &  Co.  Remem- 
ber that  these  shipment  accounts  are  entirely  sepgirate  from 
any  personal  account  which  you  may  have  with  the  same  par- 
ties. Debit  each  separate  shipment  account  for  all  costs  (the 
value  of  the  property  shipped — usually  the  cost  price — and  all 
expenses  incurred  in  making  the  shipment).  Credit  each  sep- 
arate shipment  account  for  what  it  produces  (net  proceeds). 

Journalize  the  following  transactions : 

June  1.  Student  (as  proprietor)  commenced  the  shipping 
and  commission  business  and  invested  $4250  cash. 

Bought  for  cash,  IQO  tubs  butter.  5000  lbs.,  at  24y2  ets.; 
100  crates  eggs,  3000  doz.,  at  27  ets. ;  50  boxes  cheese,  3000  lbs., 
at  17  cts. 

4.  Shipped  to  Dayton  &  Cole,  San  Francisco,  to  be  sold  on 
my  account  and  risk,  50  tubs  butter,  2500  lbs.,  invoiced  at  24^^ 
cts.  Paid  cartage  on  same  in  cash,  $2.50.  (What  account  is 
opened?    Why?  Review  the  explanation  of  shipment  accounts.) 

6.  Shipped  to  the  Woodlawn  Com.  Co.,  Oakland,  to  be 
sold  on  my  account  and  risk,  50  crates  eggs,  1500  doz.,  invoiced 
at  27  cts.    Paid  cartage  in  cash.  $3. 

9.  Received  from  Mann  &  Co.,  Redlands.  to  be  sold  on 
their  account  and  risk,  20  boxes  naval  oranges.  Paid  freight 
and  cartage  in  cash,  $5.25.  (What  account  is  opened?  Why? 
Review  explanation  of  consignment  accounts.) 

11.  Received  from  Tracey  &  Sons,  Riverside,  to  be  sold 
on  their  account  and  risk,  40  boxes  lemons.  Paid  freight  and 
cartage  in  cash,  $10.50. 

12.  Received  from  Dayton  &  Cole,  an  account  sales  of  the 
butter  shipped  them  on  the  4th  inst.  My  net  proceeds  remitted 
in  cash.  $695.25.  TAMiat  account  is  debited?  Credited?  Why? 
What  does  the  difference  between  the  two  sides  of  the  "Ship- 
ment No.  1,  Dayton  &  Cole"  account  show?     Why?) 

13.  Sold,  for  cash,  20  boxes  naval  oranges,  belonging  to 
Mann  &  Co. 's  Consignment  No.  1.  at  $2.75.  TWhat  account  is 
debited?     Credited"     AVhy?) 


59 

Closed  Mann  &  Co.'s  Consignment  No.  1  and  rendered 
them  an  account  sales.  Storage  charges,  $1 ;  commission  lO^o 
on  sales;  Mann  &  Co.'s  net  proceeds  remitted  in  cash.  (What 
does  the  debit  side  of  the  account  with  Mann  &  Co.'s  Consign- 
ment No.  1  show?     Credit?) 

16.  Received  from  J.  J.  George,  San  Diego,  to  be  sold  on 
his  account  and  risk,  100  bunches  bananas.  Paid  freight  and 
cartage  in  cash,  $7.50. 

17.  Shipped  Kranston  &  Co.,  Salt  Lake  City,  to  be  sold  on 
my  account  and  risk,  50  boxes  cheese,  3000  lbs.,  invoiced  at  17 
cts.     Paid  cartage  in  cash,  $2. 

19.  Sold,  for  cash,  25  tubs  butter,  1250  lbs.,  at  32V2  cts. ; 
25  crates  eggs,  750  doz.,  at  29  cts. 

20.  Received  from  the  Woodlawn  Com.  Co.  an  account 
sales  of  the  50  crates  eggs  shipped  to  them  on  the  6th  inst.  My 
net  proceeds  in  cash,  $402.10. 

22.  Bought  of  the  Purity  Dairy  Co.,  on  account,  25  tubs 
butter,  1250  lbs.,  at  24  cts. 

23.  Sold  for  cash  from  Tracey  &  Son's  Consignment  No. 
1,  40  boxes  lemons  at  .$3.25. 

Closed  Tracey  &  Son's  Consignment  No.  1,  and  rendered 
them  an  account  sales.  Storage  charges,  $2.15;  commission 
10%  on  sales;  their  net  proceeds  remitted  in  cash. 

24.  Shipped  Knowlton  Bros.,  San  Francisco,  to  be  sold 
on  my  account  and  risk,  25  tubs  butter,  1250  lbs.,  invoiced  at 
24  cts.     Paid  cartage  in  cash,  $1.75. 

26.  Received  from  Kranston  &  Co.,  an  account  sales  of 
cheese  shipped  them  on  the  17th  inst.  Net  proceeds,  due  in  30 
days,  placed  to  my  credit,  $571. 

27.  Received  from  Mann  &  Co.,  Redlands  (Consignment 
No.  2)  to  be  sold  on  their  account  and  risk,  15  bbls.,  1500  pine- 
apples.    Paid  freight  and  cartage  in  cash,  $5.80. 

28.  Sold  D.  D.  Pratt  &  Co.,  City,  on  account,  from  J.  J. 
George's  Consignment  No.  1,  100  bunches  bananas  at  $2.95; 
from  my  stock  of  merchandise,  25  crates  eggs,  750  doz.,  at  28^4 
cts. 


60 

Closed  J.  J.  George's  Consignment  No.  1,  and  rendered 
him  an  account  sales.  Storage  charges,  $2.25 ;  commission  10% 
on  sales ;  his  net  proceeds,  due  in  30  days,  placed  to  his  credit. 

29.  Sold,  for  cash,  from  Mann  &  Co.'s  Consignment  No. 
2,  8  bbls.,  800  pineapples  at  12%  cts. 

Post  (two  accounts  to  page)  and  take  a  trial  balance.  Re- 
member that  shipment  or  consignment  accounts  represent  mer- 
chandise and  must  not  be  confused  with  the  personal  accounts 
of  the  parties  to  whom  shipments  are  made  or  from  whom  con- 
signments are  received. 

Make  financial  statements.  For  what  are  shipment  ac- 
counts debited?  Credited?  Shipment  accounts,  at  the  time  of 
closing  the  books,  may  show  the  following  conditions:  The 
shipment  made  and  all  costs  charged  but  no  returns  received, 
in  which  case  the  shipment  is  generally  considered  a  resource 
inventory  for  the  full  amount  of  the  cost.  The  shipment  made 
and  all  costs  charged  and  the  returns  for  a  partial  sale  of  the 
shipment  credited,  in  which  case  the  unsold  portion  is  gener- 
ally treated  as  a  resource  inventory  at  cost,  and  this  inventory 
added  to  the  credit  causes  the  account  to  show  either  a  loss  or 
gain  on  the  sold  portion  (same  as  merchandise  account).  The 
shipment  made  and  charged  with  all  the  costs  and  credited 
with  the  entire  net  sales,  in  which  case  the  shipment  shows  a 
loss  or  gain. 

For  what  are  consignment  accounts  debited?  Credited? 
The  following  conditions  may  be  shown  by  consignment  ac- 
counts at  the  time  of  closing  the  books:  The  consignment  re- 
ceived and  debited  for  the  charges  advanced  but  no  sales  made, 
in  which  case  the  amount  advanced  is  a  resource.  The  con- 
signment received  and  debited  for  the  advanced  charges  and 
credited  with  partial  sales,  in  which  case  the  account  shows  a 
liability  for  the  amount  of  the  sales  less  the  advanced  charges. 
(The  charges  earned  on  the  part  sold  but  not  yet  entered,  are 
treated  as  a  resource  inventory  in  commission,  storage,  etc.) 
The  consignment  received  and  debited  for  all  advanced  charges, 
charges  earned  in  making  the  sales  and  the  net  proceeds,  and 
credited  for  the  sales  of  the  entire  consignment,  in  which  case 
the  account  balances. 


61 


Inventories:  Merchandise,  25  tubs  butter,  1250  lbs.,  at  24 
cts. ;  Commission  earned  on  consignment  No.  2,  Mann  &  Co., 
but  not  entered,  $10;  Shipment  No.  1,  Knowlton  Bros.,  $301.75. 


REVIEW  I. 

Make  use  of  the  index  in  finding  answers  to  the  following 
questions:  What  is  a  business  transaction?  What  is  book- 
keeping? What  is  the  rule  for  debits?  Credits?  What  is  in- 
cluded under  the  title  of  cash?  What  is  merchandise?  What 
are  personal  accoimts? 

Journalize  the  following  on  a  half-sheet  of  journal  paper: 
Dee.  1.     Bought  of  R.  C.  Thompson,  for  cash,  200  bbls. 
flour  at  $4. 

2.  Sold  to  A.  H.  Warren,  for  cash,  50  bbls.  flour  at  $4.50. 

3.  Bought  of  Winter  Bros.,  for  cash,  300  bu.  corn  at  37 
cts.,  and  300  bu.  wheat  at  61  cts. 

4.  Sold  Wm.  Archer  &  Co.,  for  cash,  50  bbls.  flour  at  $4.50, 
and  100  bu.  corn  at  40  cts. 

5.  Bought  of  Arthur  McMillan,  for  cash.  100  bbls.  flour  at 
$3.90,  and  1200  bu.  oats  at  33  cts. 

6.  Sold  Henry  Hamilton,  on  account.  10  bbls.  flour  at 
$4.50. 

7.  Received  cash  from  Henry  Hamilton,  on  account,  $30. 

8.  Bought  of  Henry  Hamilton,  on  account,  50  bu.  potatoes 
at  45  cts. 

9.  Henry  Hamilton  returns  2  bbls.  of  flour  which  was 
damaged,  we  credit  the  same  on  account  at  $4.50  each. 

10.  Sold  Arthur  Grayden,  on  account,  25  bu.  potatoes  at 

53  cts. 

We  have  the  following  inventory:  192  bbls.  flour  at  $3.95; 
200  bu.  corn  at  37  cts. ;  300  bu.  wheat  at  61  cts. ;  1200  bu.  oats 
at  33  cts. ;  25  bu.  potatoes  at  46  cts.  What  has  been  gained  or 
lost  on  merchandise? 

Does  the  business  owe  Henry  Hamilton  or  does  he  owe  the 
business  and  how  much? 


62 

REVIEW  II. 

"VThat  is  included  in  the  expense  account?  "What  is  real 
estate? 

As  bookkeeper  for  J.  ]\Iartin  Sno^^.  journalize  the  follow- 
ing, providing  a  separate  account  for  each  separate  piece  of 
real  estate : 

Feb.  1.  Bought  of  Sunset  Realty  Co.  a  dwelling  and 
five  lots.  1001  to  1009  Pacific  Grove  Ave.,  for  $6750.  Gave  in 
payment  cash  $5000  and  my  6-mos  note,  with  interest  at  6% 
for  the  balance.  (Open  an  accoimt  with  Pacific  Grove  Ave. 
Real  Estate.^ 

2.  Mr.  Snow  has  rented  an  office.  1126  Braly  Bldg..  pay- 
ing one  month's  rent.  $35.  ia  advance.  This  office  will  be  used 
in  carrying  on  his  business. 

3.  Bought  of  Barker  Bros.,  on  account.  10  days,  1  roll  top 
desk.  $60 ;  1  office  chair.  $6 :  1  office  table.  $14 :  4  plain  chairs 
at  $3.25;  1  clerk's  desk.  $20;  and  1  Macey  letter  file,  $18. 
(Open  Furniture  and  Fixture  account.) 

4.  Mr.  Snow  paid  Joe  Blaine  for  cleaning  windows  and 
scrubbing  floor  of  office.  $2.50. 

5.  Bought  of  Xiles  Pease  Furniture  Co..  for  cash.  1  Wilton 
rug,  $22.50.  for  use  in  office. 

6.  Paid  Wallace  &  Son  for  painting  dwelling.  1009  Pacific 
Grove  Ave..  $74.25  in  cash. 

6.     Paid  bill  for  office  telephone.  1  month  in  advance.  $4. 
S.     Bought  for  cash  office  books,  stationery,  etc..  amount- 
ing to  $18.60. 

8.  Rented  dwelling.  1009  Pacific  Grove  Ave.,  to  W.  S.  Mil- 
ler, receiving  one  month's  rent  in  advance.  $22.50. 

9.  Mr.  Snow  has  purchased  3  lots.  4562-4566  Vermont 
Ave.,  giving  in  payment  a  check  on  First  National  Bank  for 
$4720. 

10.  Paid  water  tax  for  dwelling.  1009  Pacific  Grove  Ave.. 
$1.55. 

18.  Paid  Burke  Bros,  for  new  cement  walk  and  curbing. 
4562-6  Vermont  Ave..  $113  in  cash. 

18.     Paid  Barker  Bros,  in  full  for  invoice  of  3rd  inst. 


63 

27.  Paid  an  assessment  on  Vermont  Ave.  property  for 
street  improvements,  $105. 

27.     Paid  taxes  on  Vermont  Ave.  property,  $12.45. 

27.  Sold  lots  1001  and  1003  Pacific  Grove  Ave.,  to  J.  R. 
Buell,  $2200  in  cash. 

28.  Paid  L.  A.  Towel  Supply  Co.'s  bill  for  towels  sup- 
plied office  during  month,  $1.25. 

28.  Returned  clerk's  desk,  purchased  on  the  3rd  inst.,  to 
Barker  Bros.,  at  a  discount  of  10%  from  cost,  and  purchased 
from  same  firm  a  flat-top  typewriter  desk  at  $28,  paying  bal- 
ance in  cash. 

28.  Paid  rent  on  typewriter  for  %  month,  $2.  Paid  for 
advertising  Pacific  Grove  Ave.  property,  $22. 

If  the  office  books  , stationery,  etc.,  now  on  hand  are  worth 
$12,  what  was  the  expense  to  Mr.  Snow  of  carrying  on  his  busi- 
ness for  the  month  ?  Mr.  Snow  estimates  his  Pacific  Grove  Ave. 
property  remaining  unsold  to  be  worth  $5,000.  Has  he  gained 
or  lost  on  this  property  and  how  much.  If  the  Vermont  Ave. 
property  is  worth  $5200,  how  much  has  he  gained  or  lost  on 
this  property? 


REVIEW  III. 

What  is  included  under  the  title  of  Bills  Receivable? 
Bills  Payable? 

Jan.  1.  You  begin  a  general  merchandise  business  with 
no  investment. 

Borrowed  $5000  from  the  City  Bank  on  your  30-day  note. 

Gave  J.  Benson  your  10-day  note  in  payment  of  rent  of 
store  for  one  month,  $100. 

2.  Bought  a  bill  of  merchandise  from  John  Henderson, 
amounting  to  $5000,  and  gave  him  your  note  at  thirty  days, 
with  interest,  in  payment  of  same. 

Sold  H.  Mason,  on  account,  2-10,  n-30,  3000  bu.  wheat  at 

80  cts. 

3.  Bought  a  horse  and  wagon  from  J.  W.  Brown  and  had 


64 

the  same  charged  to  your  account,  $500.     (Open  Horse  and 
Wagon  account.) 

4.  Sold  John  Davidson,  i/^  cash,  balance  15-day  note, 
5000  bu.  wheat  at  80  cts. ;  2000  bu.  corn  at  50  cts. 

5.  Received  of  H.  Mason  his  note  at  15  days  from  Jan.  2, 
for  the  full  amount  of  his  bill  of  that  date. 

8.  Accepted  J.  W.  Brown's  15-day  sight  draft  on  you,  in 
favor  of  H.  E.  Rose,  in  full  payment  of  the  horse  and  wagon 
purchased  on  the  third. 

11.     Paid  your  note  of  Jan.  1,  due  today,  by  check. 

14.  Sold  H.  Mason  a  bill  of  merchandise  amounting  to 
$2000,  receiving  in  payment  a  draft  at  three  days  sight,  on  H. 
E.  Wing  of  this  city,  which  the  drawee  has  this  day  accepted, 

16.  Bought  of  John  Martin  a  bill  of  merchandise,  amount- 
ing to  $2500.  Gave  in  payment  the  acceptance  received  on  the 
14th,  and  your  personal  note  at  ten  days,  with  interest,  for  the 
balance. 

19.  Received  of  John  Davidson  a  sight  draft,  on  Henry 
Jameson,  in  full  payment  of  his  note  due  today. 

21.  Sold  Henry  Webb  a  bill  amounting  to  $1000,  receiv- 
ing in  payment  his  note  at  15  days  for  $500,  and  a  30-day  draft, 
on  Ira  Johnson,  for  the  balance. 

23.  Paid  acceptance  of  the  8th  inst.,  favor  of  H.  E.  Rose, 
by  check. 

What  is  the  face  value  of  the  notes  you  hold  against  oth- 
ers? What  is  the  face  value  of  the  notes  held  by  others  against 
you? 


REVIEW  IV. 

What  is  interest?  Discount?  Merchandise  Discount  is 
an  allowance  made  on  a  bill  of  merchandise  for  payment  within 
a  certain  specified  time.  Bills  Receivable  and  Bills  Payable 
should  always  be  entered  at  their  face  value.  Journalize  the 
following : 

Feb.  1.  You  owe  Jesse  Warner  $512.  Give  him  cash  for 
%  the  amount  and  your  note  at  ten  days,  with  interest,  for  the 
balance. 


65 

2.  IT.  M.  Zaner  pays  you  the  interest  accrued  on  his  note 
in  cash,  $16.45. 

3.  John  King  prepays  an  invoice,  previously  charged  to 
his  account,  amounting  to  $186.  You  allow  him  a  discount  of 
2%  and  receive  the  balance  in  cash. 

4.  You  pay  the  interest  on  your  note  in  favor  of  Frank 
Storm,  in  cash,  $23.06. 

5.  You  have  Isaac  Shaw's  note  for  $600,  at  90  days.  The 
note  has  run  for  30  days  and  you  discount  it  at  the  bank,  at 
6%,  and  receive  cash  for  the  proceeds. 

6.  Receive  cash  of  Geo.  Burns  for  his  note  and  interest 
due  today.     Face  of  note  $425,  interest  accrued  $10.65. 

7.  You  owe  Joel  Starr  $206  on  account  and  pay  the  same 
in  cash,  less  3%. 

8.  There  is  a  mortgage  on  your  house  amounting  to  $2200. 
Today  one  year's  interest  is  due,  $110.  Settle  for  the  interest 
by  giving  your  note  at  10  days.  The  mortgage  is  held  by  Chas. 
Bennett. 

9.  You  have  John  Davis'  note  for  $400,  with  interest,  at 
60  days.  The  note  has  run  for  30  days,  and  you  discount  it  at 
the  bank,  at  6%,  and  receive  credit  for  the  proceeds. 

10.  On  Jan.  12  you  bought  a  bill  of  merchandise  of  H. 
Johnson  amounting  to  $600,  terms ;  2-10,  1-30,  net  60.  In  order 
to  get  the  benefit  of  the  discount  you  pay  the  same  by  check. 

11.  Your  note  of  Feb.  1,  is  due  today.  Pay  full  amount 
by  check  on  City  Bank. 

12.  You  receive  today,  on  account,  William  Weaver's  30- 
day  note  for  $300,  without  interest.  You  discount  it  at  once 
and  receive  cash  for  the  proceeds.    Rate  of  discount,  6%. 

If  the  receiving  of  the  note  on  account  is  considered  as 
one  transaction,  and  discounting  the  note  at  the  bank  as  an- 
other transaction,  then  two  entries  are  necessary.  First,  debit 
Bills  Receivable  and  credit  Wm.  Weaver.  Second,  debit  Dis- 
count and  Cash  and  credit  Bills  Receivable  (Why?)  If  con- 
sidered  as  one  transaction  in  which  Wm.  Weaver  has  produced 
a  note  which  immediately  resulted  in  our  getting  credit  at  the 


66 

bank  less  discount,  then  Discount  and  Cash  must  be  debited 
and  Wm.  Weaver  credited. 

13.  Your  note  in  favor  of  Samuel  Barnum,  for  $200  and 
interest  on  the  same,  $6.50,  is  due  today.  You  redeem  the  note 
and  interest  on  same  by  issuing  a  new  interest-bearing  note  for 
$206.50. 

The  interest  accrued  on  unpaid  notes  is  as  follows:  Bills 
Receivable,  $10.50 ;  Bills  Payable,  $12.  What  has  been  the  loss 
or  gain  on  interest  and  discount?  What  is  the  difference  be- 
tween the  two  sides  of  the  merchandise  discount  account,  and 
what  does  the  difference  show? 


REVIEW  V. 

The  entries  for  this  set  may  be  made  in  the  journal  or  in 
journal  and  cash  book.  Apply  to  your  teacher  for  directions 
concerning  what  books  to  use. 

April  1.  Hiram  Cooke  and  Lawrence  Stoner  have  this  day 
formed  a  co-partnership  for  the  purpose  of  continuing  the  hay 
and  grain  business  previously  conducted  by  Mr.  Stoner.  In  ad- 
dition to  carrying  on  this  business,  they  will  loan  money  and 
deal  in  real  estate. 

Mr.  Cooke  invests  the  following  resources  and  liabilities: 

Cash  on  deposit  in  Commercial  Bank,  $7000. 

Note  made  by  John  Spring,  dated  March  1st,  at  two 
months,  with  interest  at  6%,  face  of  note,  $2000. 

Note  made  by  the  Western  Tool  and  Die  Co.,  dated  Feb. 
20,  at  90  days,  without  interest,  face  of  note,  $1500. 

Interest  accrued  on  John  Spring's  note,  $10. 

Due  A.  W.  Jones  on  account,  $490. 

Due  Bolton  Bros.,  on  account,  $20. 

Mr.  Stoner  invests  the  following: 

500  bu.  rolled  barley  at  60  cts. 

5  tons  wheat  at  $1.50  per  cwt. 

12  tons  alfalfa  at  $10  per  ton. 

18  tons  barley  hay  at  $9.50  per  ton. 


67 

14  tons  straw  at  $6.50  per  ton. 

Horses,  wagons  and  harness  valued  at  $510. 

Wm.  Scott  owes  him  on  account  $24.50. 

Summerland  &  Co.  owe  hira  on  account,  $118. 

Mrs.  C.  L.  Patch  owes  him  on  account,  $54.25. 

McFarland  &  Swayne  Co.  owe  him  on  account,  $211.20. 

He  owes  Marsh  &  Wallson,  on  account,  $67.50, 

He  owes  Bolton  Bros,  on  account,  $110. 

Cash  on  deposit  in  First  National  Bank,  $8427.55. 

The  firm  name  decided  upon  is  "The  Cooke-Stoner  Co." 

The  hay  and  grain  business  will  be  continued  at  325  E. 
Fourth  Street,  but  it  is  thought  best  to  open  an  **up-town" 
office,  chiefly  to  facilitate  the  real  estate  and  loan  part  of  the 
firm's  business. 

Rented  for  office  purposes  Room  12,  Lande's  Bldg.,  paying 
one  month's  rent  $28,  in  advance. 

Bought  office  furniture  of  the  Excelsior  Furniture  Co.,  as 
per  invoice,  giving  our  check  for  $154.75  in  payment. 

Received  for  sundry  cash  sales  during  the  day  at  the  feed 
store,  $18.25. 

2.  Had  Home  telephone  installed  in  office,  paying  one 
month's  rent  in  cash,  $6. 

Paid  Bolton  Bros,  cash  on  account,  $50. 
Paid  Walter  Smith  in  cash  for  cleaning  office  room,  $3. 
Loaned  Mrs.  Lillian  Swartz  on  her  note  at  30  days,  bear- 
ing interest  at  7%,  $250. 

Cash  sales  for  day,  $17.35. 

3.  Received  of  McFarland  &  Swayne,  a  10-day  note  for 
$200,  with  interest  at  6%,  to  apply  on  account. 

Bought  of  M.  C.  Adams,  10  lots,  Nos.  4700  to  4709  in- 
clusive, S.  Fulton  St.    Paid  for  same  in  cash,  $3450. 

Paid  L.  W.  Newitt  for  painting  sign  at  feed  store,  $4.50. 
Cash  sales  for  day,  $24. 

4.  Sold  Summerland  &  Co.  Mdse.  amounting  to  $150.  Re- 
ceived cash,  $100,  the  balance  on  account. 

The  Western  Tool  and  Die  Co.  today  arranged  to  take  up 
their  note  of  Feb.  20.  They  give  us  a  new  30-day  note  for  $500, 
and  cash  for  the  remainder,  less  a  discount  of  6%. 


68 

Cash  sales  for  the  day,  $19.55. 

5.  Bought  of  Marsh  &  Wallson  a  carload  of  alfalfa.  Gave 
in  payment  our  30-day  note  for  $125,  balance  on  account,  $57.80. 

Paid  A.  W,  Jones,  cash  to  apply  on  account,  $300. 
Cash  sales  for  day,  $32.50. 
Paid  for  having  horses  shod,  $2. 

6.  Loaned  the  Southwestern  "Wool  Co.,  on  their  30-day, 
6%  note,  $2000. 

Paid  employees'  salaries  for  week,  $22.50. 
Cash  sales  for  day,  $41.60. 

8.  Paid  L.  W.  Newitt  for  lettering  on  office  door,  $1.25. 
Paid  for  stationery,  etc.,  $14.50. 

Took  out  six  months'  insurance  policy,  on  stock  and  equip- 
ment at  the  feed  store,  in  the  German  Fire  Insurance  Co.,  face 
of  policy,  $2000.    Paid  premium  of  1^/4%  on  same  in  cash. 

Bought  lots  number  762  and  764  N.  Lake  St.,  of  the  Mutual 
Eeal  Estate  Co.  Lots  front  120  ft.  on  Lake  St.  and  are  125  ft. 
deep.  Terms  of  purchase  are  $100  per  front  foot,  %  cash,  bal- 
ance in  3  equal  notes,  one  for  six  months,  one  for  one  year,  and 
one  for  1^2  years,  each  bearing  interest  at  6%. 

9.  Paid  City  and  County  taxes  on  Fulton  St.  real  estate 
amounting  to  $14.60. 

Bought  of  Marsh  &  Wallson,  2-10,  n-30,  10,450  lbs.  Ro. 
Barley  at  69  cts.  per  cwt. 

Paid  our  note  of  the  5th  inst.,  favor  Marsh  &  Wallson,  in 
cash,  less  discount  at  6%. 

10.  Sold  R.  D.  Bunker,  2-10,  1-30,  n-60,  Mdse,  amounting 
to  $315. 

11.  Sold  Smith  &  Walton  lot  No.  4700  Fulton  St.,  for 
$500,  receiving  in  payment,  $400  cash,  balance  on  account. 

Received  of  Summerland  &  Co.,  $100  cash,  to  apply  on  ac- 
count. 

12.  Loaned  the  Excelsior  Furniture  Co.  on  their  60-day 
note,  $1500,  deducting  interest  at  6%  in  advance. 

Loaned  Wm.  Scott  $10  on  account. 

13.  Paid  tax  on  Lake  St.  property  amounting  to  $28.70. 
Paid  wages  for  week,  $22.50. 


69 

Mr.  Stoner  withdraws  cash  for  private  use,  $25. 
Cash  sales  for  week,  $378.45. 

15.  Sold  A.  C.  Hill,  2-10,  n-30,  12  tons  alfalfa  at  $13, 
5000  lbs.  wheat  at  $1.63  per  ewt.,  3  tons  straw  at  $7.25.  Mr. 
Hill  hands  us  a  check  of  $200,  with  the  understanding  that  he 
is  to  receive  advantage  of  the  agreed  discount  on  the  payment 
made. 

Paid  a  special  assessment  of  $120,  for  cement  curbing  and 
street  improvements  on  Lake  St.  real  estate. 

16.  Bought  of  Mrs.  Jennie  Moore  the  frame  dwelling  now 
situated  at  910  Fulton  St.,  giving  in  payment  our  90-day  note, 
without  interest,  for  $2100.  We  have  made  arrangements  with 
Smith  &  Walton  to  move  this  house  on  lot  No.  4709  of  our  Ful- 
ton St.  property. 

Sold  lot  No.  4702  Fulton  St.  to  Mrs.  C.  L.  Patch  for  $465. 
Received  cash,  $350,  balance  on  account. 

Paid  for  janitor  services  for  office,  No.  12  Lande's  Bldg., 
to  date,  $5. 

17.  McFarland  &  Swayne  paid  their  note  of  the  3rd  inst., 
and  interest,  in  cash. 

Sold  Wm.  Scott,  Mdse.  amounting  to  $210.35,  on  account. 

18.  John  Spring  paid  his  note  of  March  1  and  interest 
accrued  to  date  in  cash. 

19.  Sold  Charles  Miller  lot  No.  4708  Fulton  St.,  at  $510. 
Received  in  payment  his  3-day  sight  draft  on  L.  C.  Smith  for 
$210,  balance  in  cash. 

Paid  Marsh  &  Wallson  in  full  for  invoice  of  the  9th  inst., 

less  2%. 

20.  Bought  of  A.  W.  Jones,  Mdse.  amounting  to  $416, 

terms:  3-10,  n-60. 

Paid  employees'  wages  for  week,  $22.50. 
Mr.  Cooke  withdraws  for  private  use,  $35. 
Cash  sales  for  week,  $516.75. 

22.  Received  cash  in  full  for  draft  received  on  the  19th 

inst. 

23.  Received   a  bill  from   Smith  &  Walton  for  moving 


70 

dwelling  to  4709  Fulton  St.,  $250.    After  deducting  the  amount 
due  us  on  account,  we  pay  the  balance  of  this  bill  in  cash. 

24.  Received  cash  of  A.  C.  Hill  in  full  of  balance  due  on 
invoice  of  the  15th  inst.,  less  2%. 

Sold  to  the  Carlton  Realty  Co.  our  Lake  St.  real  estate  at 
$133  1/3  per  front  foot.  Received  in  payment  cash  for  one-half 
and  their  6-months  note  for  the  balance. 

By  special  agreement  with  the  Mutual  Real  Estate  Co.,  we 
pay  our  three  notes  outstanding  against  this  property  and  in- 
terest accrued  to  date  in  cash. 

25.  Transferred  note  received  on  the  4th  inst.,  from  the 
Western  Tool  &  Die  Co.,  to  A.  W.  Jones  to  apply  on  account, 
less  discount  for  the  unexpired  time  at  6%. 

Bought  of  Bolton  Bros.,  Mdse.  amounting  to  $2480.  Gave 
in  payment  note  received  on  the  6th  inst.  from  the  Southwest- 
ern Wool  Co.,  receiving  credit  for  the  proceeds,  balance  on 
account. 

26.  Paid  the  following  bills:  For  foundations  4709  Ful- 
ton St.,  $65.40;  for  plumbing  at  same  place,  $12.65;  for  paint- 
ing and  repairing  at  same  place,  $93. 

Paid  employees'  wages  for  week,  $22.50. 

Summerland  &  Co.  have  failed  in  business.  Being  unable 
to  pay  their  debts  in  full,  they  have  compromised  with  their 
creditors  on  a  basis  of  65  cts.  on  the  dollar.  We  receive  a  check 
from  them  settling  their  indebtedness  to  us  on  this  basis. 

Cash  sales  for  the  week,  $472.60. 

28.  Rented  house  and  lot  No.  4709  Fulton  St.  to  L.  A. 
Houseman,  receiving  one  month's  rent,  $25,  in  advance. 

Paid  Bolton  Bros.,  in  full,  for  balance  of  invoice  of  the 
25th  inst.,  less  1%. 

29.  Paid  rent  for  feed  store  for  month  of  April,  $45. 

A  desk  purchased  on  the  1st  inst.,  of  the  Excelsior  Furni- 
ture Co.,  and  costing  $18,  was  today  exchanged  for  one  of 
larger  size,  and  the  difference  of  $7  paid  in  cash. 

30.  Paid  bookkeeper  and  stenographer's  salary  to  date, 
$65. 

Paid  L.  A.  Towel  Supply  Co.'s  bill  for  month,  $1.25. 


71 

Paid  sundry  expense  items  at  feed  store  in  cash,  $10.25. 

Cash  sales  to  date,  $214. 

Paid  Marsh  &  AVallson  to  apply  on  account,  $100. 

Mr.  Stoner  reports  the  following  inventories: 

Mdse.  on  hand,  $2060.  ! 

Fulton  St.  real  estate,  $5330. 

Horse  and  wagon,  $500. 

Due  on  employees'  wages,  $12.50. 

Unused  stationery,  etc.,  $8, 

Furniture  and  Fixtures,  $154. 

Post,  take  a  trial  balance,  make  out  financial  statements, 
and  close  all  accounts  affected  by  the  losses  or  gains  of  the 
business. 


REVIEW  VL 

What  is  a  shipment?  What  is  a  consignment?  What  is 
commission?     What  is  a  shipping  and  commission  business? 

Journalize  the  following  transactions: 

May  1.  Shipped  the  United  Commission  Company,  Port- 
land, Oregon,  to  be  sold  on  our  account  and  risk,  240  boxes 
Lemons  valued  at  $2  per  box.  Paid  drayage  and  loading  ex- 
penses, $27.25. 

Shipped  the  Illinois  Produce  Co.,  Chicago,  510  boxes  Lem- 
ons valued  at  $2  per  box.  Paid  drayage,  loading  and  iceing 
expenses  amounting  to  $76.10. 

2.  Received  of  C.  0.  Filmore,  Sacramento,  to  be  sold  for 
his  account,  300  sacks  Early  Rose  potatoes.  Paid  freight  and 
drayage  on  same,  $67.50. 

3.  Sold  for  cash  20  boxes  of  Lemons,  at  $2.15,  from  our 
own  stock,  150  sacks  of  Early  Rose,  at  $1.67,  from  C.  O.  Fil- 
more's  consignment. 

4.  The  First  National  Bank  has  presented  a  sight  draft 
for  $150,  drawn  on  us  by  C.  0.  Filmore,  on  account  of  his  con- 
signment. We  have  paid  same  by  check  on  American  National 
Bank. 


72 

5.  Received  of  the  Gold  Medal  Milling  Co..  St.  Paul,  500 
barrels  of  flour,  to  be  sold  for  their  account.  Paid  freight  and 
drayage  on  same.  $302.60. 

6.  Sold  ^eeks  &  Co.,  on  account.  100  barrels  flour  from 
the  Gold  Medal  Milling  Co.'s  consignment  at  $6.45. 

8.  Sold  for  e^sh  10  boxes  lemons  at  $2.10,  from  our  own 
stock.  100  sacks  Early  Rose  from  C.  O.  Filmore's  consignment 
at  $1.70,  and  100  barrels  flour  at  $6.40.  from  Gold  Medal 
Milling  Co.'s  consignment. 

9.  Drew  a  sight  draft  on  the  United  Commission  Co.,  on 
account  of  our  shipment,  for  $400  and  deposited  same  in  bank. 

10.  Sold  for  c^sh  50  sacks  Early  Rose,  from  C.  0.  Fil- 
more's consignment  at  $1.73. 

11.  Closed  C.  0.  Filmore's  consignment,  charging  5% 
commission  and  l^f  storage.  Remitted  the  balance  due  him 
by  San  Francisco  draft. 

12.  Received  an  account  sales  from  the  United  Commis- 
sion Co.  showing  $710.26  net  proceeds,  which  amount  has  been 
placed  to  our  credit  by  them. 

15.  Accepted  a  10-day  sight  draft,  for  $300.  drawn  on  us 
by  the  Gold  Medal  Milling  Co.  on  account  of  their  consignment. 

What  does  the  account  with  our  Shipment  to  the  United 
Commission  Co.  show?  "Why?  What  does  our  account  with 
the  United  Commission  Co.  show?  Why?  If  the  lemons  shipped 
to  the  Illinois  Produce  Co.  are  inventoried  at  $1,100,  what 
does  our  account  with  this  shipment  show?  Why?  What  does 
our  account  with  C.  0.  Filmore's  consignment  show?  Why? 
What  does  our  account  with  the  Gold  Medal  Milling  Co.'s 
consignment  show?    Whv? 


73 


APPENDIX. 

Corrections. 

Entries  that  have  been  made  in  ink,  if  found  to  be  wrong,  should 
never  be  erased.  Corrections  should  be  made  so  as  to  show  clearly  what 
the  error  was  and  what  the  correction  is.  Of  course,  corrections  should 
be  neat  and  precise. 

If  amounts  are  wrong,  either  of  the  corrections  given  in  Ex.   1  are 

satisfactory. 

If  the  debit  or  credit  items  both  are  wrong,  it  is  a  good  plan  to  check 
with  a  cross  the  items  in  the  ledger  folio  column,  cancel  the  amounts 
(see  Ex.  2)  and  rewrite  the  entry  referring  in  the  explanation  to  the 
error  (see  Ex.  3). 

If  the  entry  in  Ex.  2  were  posted  before  the  error  was  discovered, 
the  correction  may  be  made  as  shown  in  Ex.  4. 

Errors  in  a  ledger  account  my  be  corrected  as  shown  in  Ex.  5. 

All  corrections  should  be  made  about  as  shown  in  these  examples. 
They  should  be  clear,  clean-cut,  precise. 


/  o 


g" 


J  So 


/  So 


2.  3  C 


'r~^Z^'  v~ 


/SO 


/so 


/  o 


74 


/ 


3/^ 


3  Jig" 


/  ss 


/  c 


p^ 


\     \ 


i-i-W  I  ■  ^ 


LOCATING  EKROBS  IN  TEIAL  BALANCES. 

When  a  trial  balance  does  not  prove,  it  is  well  to  follow  a  definite 
plan  of  search  for  the  error.  The  following  plan  is  suggested  as  a  thor- 
ough one  for  the  beginner  and  one  which,  with  a  mastery  of  the  subject 
of  bookkeeping,  can  be  modified  by  the  worker  to  fit  unusual  conditions. 
Carry  out  the  plan  step  by  step  in  the  order  given. 

1.  Be  sure  the  additions  of  the  trial  balance  are  correct. 

2.  Find  the  exact  amount  out  of  balance  and  if  this  amount  occurs 
anywhere  in  your  work  be  sure  that  it  is  correctly  placed.  If  the  differ- 
ence is  1,  10,  100,  etc.,  the  probabilities  are  you  have  made  a  mistake  in 
addition  or  substraction. 

3.  If  the  amount  out  of  balance  is  divisable  by  2,  look  for  one-half 
of  the  amount  and  be  sure  such  amounts  are  on  the  correct  side.  To 
illustrate:  $9.25  posted  on  the  wrong  side  will  make  a  difference  of 
twice  that  amount,  or  $lS.oO,  in  the  trial  balance 

4.  Verify  the  additions  of  your  ledger  accounts  and  the  carrying 
of  the  footings  or  balances  to  the  trial  balance. 

5.  Check  your  posting. 

6.  Examine  the  last  ledger  closing  and  find  out  if  your  ledger  was 
in  balance  when  closed. 

7.  Examine  the  books  of  original  entry  and  make  sure  that  you  have 
a  balancing  entry  for  each  transaction. 

If  the  above  seven  steps  are  accurately  taken,  your  trial  balance  will 
prove.  The  following  does  not  discover  any  errors  that  can  not  be  dis- 
covered by  the  above  seven  steps,  but  it  will  often  save  a  great  deal  of 
time  in  locating  certain  kinds  of  errors. 

If  the  amount  out  of  balance  is  divisible  by  nine,  the  error  may  be  a 
transposition,  transplacement  or  a  transposition-transplacement.  These 
errors  may  be  located  according  to  the  following  processes: 

Transposition.  By  transposition  is  meant  the  change  of  position  of 
two  digits  in  a  number,  for  instance  if  12.5  is  written  as  152,  305  written 
as  503,  etc.  An  error  of  this  kind  always  causes  a  difference  which  is 
divisible  by  nine.  If  the  difference  is  of  two  places  the  transposition  is 
between  adjacent  digits.  Divide  this  difference  by  9  and  the  quotient 
will  give  the  difference  between  the  two  digits  transposed.  Thus  in 
the  first  illustration  above  the  difference  between  152  and  125  is  27. 
27  divided  by  9  gives  a  quotient  of  3,  that  is  of  the  digits  transposed  one 
is  greater  than  the  other  by  3.  It  might  be  1  and  4,  2  and  5.  3  and  6,  etc. 
Examine  all  numbers  which  show  such  a  difference  and  determine  if  they 


75 

are  correctly  entered.  If  the  difference  is  of  more  than  two  places  the 
transposition  occurs  between  digits  that  are  not  adjacent.  Divide  by  as 
many  nines  as  may  be  necessary  to  secure  a  quotient  of  one  figure.  Thus 
in  the  second  illustration  above  the  difference  between  503  and  305  is 
198.  198  divided  by  99  gives  a  quotient  of  2,  that  is  of  the  two  digits 
transposed  one  is  greater  than  the  other  by  2.  It  might  be  1  and  3,  2  and 
4,  3  and  5,  etc.  One  less  than  the  number  of  places  in  the  divisor  99, 
indicates  the  number  of  figures  between  the  two  transposed.  There  are 
2  places  in  99.  hence  one  figure  is  found  between  the  3  and  5.  If  the 
amount  out  of  balance  has  zeros  to  the  right,  they  are  disregarded  in  this 
process.  Thus  if  42378.  is  written  as  72348  the  difference  is  29970.  2997 
divided  by  999  gives  a  quotient  of  3.  which  is  the  difference  between  the 
digits  transposed,  while  one  less  than  the  number  of  places  in  the  divisor, 
or  2,  is  the  number  of  digits  between  the  two  figures  transposed. 

Transplacement,  Transplaeement  is  the  writing  of  figures  out  of 
their  proper  places,  getting  them  too  far  to  the  right  or  left,  for  instance 
$35  written  as  35  cents,  or  $160  written  as  $1.60.  etc.  If  the  error  is  a 
writing  of  dollars  as  cents,  or  the  reverse,  the  amount  out  of  balance 
will  consist  of  dollars  and  cents.  Add  the  cents  to  the  dollars  and  the 
sum  will  be  99.  Drop  the  cents  and  add  one  to  the  dollars  and  you  will 
have  the  amount  transplaced.  To  illustrate:  $35  written  as  35  cents  will 
give  .'534.65  as  the  amount  out  of  balance,  65  plus  34  is  99.  Drop  the 
cents  (65).  add  one  to  the  dollars  (34  plus  1)  and  you  have  the  amount 
transplaced  (35).  If  $160  is  written  as  $1.60  the  amount  out  of  balance 
is  $158.40.  Practically  always  transplaeement  occurs  by  confusing  dollars 
with  cents,  or  the  reverse,  thus  causing  a  shifting  of  2  places  to  the  right 
or  left,  therefore  divide  by  nines  in  2  places,  or  99.  15S.40  divided  by  99 
gives  160  the  number  transplaced. 

Transposition-Transplacement.  Transposition-transplacement  is  the 
writing  of  dollars  as  cents  and  at  the  same  time  transposing  the  two 
digits,  thus  $23  as  32  cents,  or  $64  as  46  cents.  Divide  the  amount  out  of 
balance  by  a  number  with  nines  in  enough  places  so  that  there  will  be  but 
one  figure  in  the  quotient.  Then  divide  the  remainder  in  the  same  way. 
Your  first  quotient  will  be  the  first  digit  and  the  second  quotient  the 
second  digit  of  the  number  transposed  and  transplaced.  To  illustrate: 
if  $23  is  written  32  cents  the  amount  out  of  balance  is  $22.68.  $22.68 
divided  by  999  gives  a  quotient  of  2  and  a  remainder  of  270.  Disregard 
the  cipher  to  the  right.  Divide  by  9,  the  quotient  is  3.  2  is  the  first 
digit  and  3  the  second  of  the  number,  or  23.  If  $64  is  written  as  46 
cents  the  amount  out  of  balance  is  $63.-54.  Divide  by  999  and  the  quotient, 
first  digit,  is  6.  Divide  the  remainder,  360,  dropping  the  zero,  by  9  and 
the  quotient,  second  digit,  is  4,  therefore  the  number  transplaced  and 
transposed  is  64. 


76 


INDEX 


Accounts    1 

Accounts,  Forwarding  of  21 

Accounts,  Ruling  of  34 

Bank    Discount   42 

Bills  Payable    23 

Bills  Receivable    23 

Bookkeeping   1 

Business  Transaction  1 

Buying  on  Account 8 

Cash  Account  Closing  33-37 

Cash  Balance  In  Trial  Balance 54 

Cash  Book   49 

Cash  Book,  Posting  From 54 

Cash  Defined    1 

Checking    20 

Commission    Business    56-71 

Consignment  Accounts    57 

Consignment  Account  Analysis  60 

Correction    of   Errors 73 

Credit    3 

Debit    3 

Discount    41 

Drayage,    How    Charged 22 

Errors  in  Trial  Balance 74 

Expense  Account  Analysis    27 

Expense  Account  Closing  35 

Expense  Account  Defined    6 

Financial   Statements   from   Account 

Balances   31 

Forwarding   of   Accounts 21 

Freight,    How    Charged 22 

Gain  Explained  28 

Interest    39 

Inventory  Explained  27 

Inventory,    Transfer   of 31-32 

Journalizing  Explained  15 

Ledger  Defined    3 

Ledger  Closings    30-31-32-33-34 

Ledger  Closings,     Graphic     Illustra- 
tion    33-34 

Liabilities     26 

Losses  Explained  28 


Loss  and  Gain   Account   33 

Loss     and     Gain     Statement     Rou- 
tine     28-29 

Merchandise  Account  Analysis    27 

Merchandise  Account  Closing    34 

Merchandise  Defined    1 

Money    1 

Notes    23 

Part  II     43-49 

Part  III   56 

Partnership   46 

Partnership,   Dissolution  of 48 

Personal  Accounts   8 

Personal  Accounts,  Closing  of 37 

Posting   Routine   19 

Present    Worth    28 

Proof  of  Statements 29 

Proprietor's  Account  Closing  36 

Proprietor's  Investment    9 

Purchases    on    Account 8 

Real    Estate    25 

Resources  and  Liabilities    26 

Resources  and  Liabilities  Statement 

Routine    26 

Reviews     61-62-63-64-66-71 

Ruling  of  Accounts 34 

Sales  on  Account 8 

Sets,   A.    J.    Laws 18 

Cash    Book    49 

James  D.   Norton 8 

J.   Oscar  Dwight 22 

Hardware  Business  43 

M.  H.  Winters 13 

Shipping  and  Commission 56 

Shipment  Accounts   57 

Shipment  Accounts,  Analysis  of  60 

Transfer  Eentries,  Color   of   34 

Ti-ansfer  Entries,  Paging    of    35 

Trial  Balance  10 

Trial  Balance  by  Differences 26 

Value    - 1 


YC   AbUJo 


54r.ni5 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


